The lossy vs lossless distinction loses its meaning in the absence of provenance. You can compress a bitmap into a .jpg q=1, and then save it as a .png. The .png is technically lossless, but that clearly doesn't tell much about the image quality. Conversely, many cameras shoot JPEG as the source format. The .jpg is, in effect, the master copy from which the loss is measured (obviously there are losses from the sensor data, but still).
And a CDN could want to do it, because you can degrade a png in lossy ways from the original that make it compress much better, even though the compression is lossless.
