The first sentence of the introduction ends with "we introduce Dynamic-Length Float (DFloat11), a lossless compression framework that reduces LLM size by 30% while preserving outputs that are bit-for-bit identical to the original model" so yes it's lossless.

information-optimal compression is "the theoretical minimum number of bits needed to represent data without losing any information, based on the data's entropy", so I think they mean the same thing you do

A good example that information, i.e. bits, are only meaningful with respect to an end. If you don't know what the bits in a float will be used to, you can't throw them away, but if the floats are in a function, and you know that what some bits are can't affect the output of the function regardless of input, then you can throw those bits away and still have a lossless compression of the function.

Think Morse code, where frequently used letters have shorter codes than less frequent ones. This ensures zero loss of information.

The part you quote is a few sentences past the sentence that says "preserving outputs that are bit-for-bit identical to the original model".