Psychoacoustic treatment is not limited by using masking. Dithering is a signal processing that always results in degradation of a signal waveform (adding noise) but the same time it improves auditory perception of that signal. Such “magic” processing can be based only on some knowledge of perception - a product of psychoacoustic research. So, dithering is a perfect example of psychoacoustic treatment of audio signal. I think it is obvious.
No. No degradation and no magic.