It is based upon this post and see its related post
That comes from the underlying FFmpeg filter fspp
https://ffmpeg.org/ffmpeg-filters.html#fspp
I renamed it in Shotcut to something less ambiguous than “post-processing.” In Shotcut, it always operates in constant quantization mode since the editing engine does not make the source quantization factor available. I recently used it to reduce noise on my Super 8 transfers.