It depends on how you look at it.

Shader model 2.0 lighting precision is confined to 8 bit integers, which limited the contrast ratio to 256:1. Using the HVS color model, the value (V), or brightness of a color has a range of 0 - 255. This means the brightest white (a value of 255) is only 255 times brighter than the darkest shade above pure black

Lighting calculations were integer based, which didn't offer much accuracy because the real world is not confined to whole numbers

Shader Model 3.0's lighting precision has a minimum of 32-bits as opposed to 2.0's 8-bit minimum. Also all lighting precision calculations are floating-point based. NVIDIA states that contrast ratios using Shader Model 3.0 can be as high as 65535:1 using 32-bit lighting precision

FP16 and FP32 just cant use MSAA so valve wrote there own HDR, it's real SM2/3 it just does not use integers