've called this recipe "Woodworm" because that's what I was reminded of after I applied it to the image of the knight. The main ingredients are the Hard Mix and Pin Light blending modes and a couple of shots of Gaussian Blur. How much of each is up to you, but the two work closely together in this effect. On its own, Hard Mix reduces all pixels to one of eight colors, making a blocky image. But blurring the image creates larger areas of similarly colored pixels, which Hard Mix brutally shapes into lumps of pure color, like a gradient map or woodworm. The higher the blur radius value, the more obvious this effect becomes, although with really high values you'll lose all semblance of the original picture.
1 In the Layers palette, duplicate the original image by dragging the background layer onto the "Create a new layer" icon. Alternatively, just use the keyboard shortcut Ctrl/Cmd-J Name this layer "Hard Mix."
2 With the Hard Mix layer selected, choose Hard Mix from the blending mode pull-down menu
3 Invert the Hard Mix layer by selecting Image > Adjustments > Invert
4 Still with the Hard Mix layer selected, apply Filter > Blur > Gaussian Blur, and set the radius value to 5.
5 Return to the Original layer, duplicate the background image again, and call it "Pin Light."
6 Drag the Pin Light layer to the top of the Layers palette and select Pin Light from the blending mode pull-down menu
7 Invert the Pin Light layer (Ctrl/Cmd-I), then go to Filter > Blur > Gaussian Blur and apply a radius value of 5
8 With the Pin Light layer selected, experiment by reducing the fill opacity until you get the desired result
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