It's already possible to anonymise 3 bytes:
This is however not good enough. We also need to have a setting to basically anonymise 4 bytes and therefore the entire IP address. In this case we'd for example always track
Why might 3 bytes not be enough? Eg if you have only few visitors at a certain time, and you have an IP address in Matomo logged starting with eg
192.0.0.0, then you might still be able to crosslink this with log files to get the full IP address etc.