Good point. The caption for Figure 2 is wrong. The picture is of the first step in decompression of a 512 x 512 image. A pity you do not actually see the original that they refer to.
I think that actually the caption is "correct", and they must have simply included the wrong image, because the text says "Figure 2 shows the
original digital image of Balloon, which is of dimensions
512 pixels by 512 pixels, with 256
gray levels at each pixel."
