I came across the most incredible post on distractionware today on sub-pixel fonts. It explains how to create a readable 1×5 pixel font.

The technique he uses to accomplish this is based on the fact that each pixel on an LCD screen is made up of a red, green and blue sub-pixel that are next to each other horizontally. Normally, these three components merge to form one normal pixel since our eye does not normally detect the individual components.

That is where the secret of this technique comes in. By clever manipulation of these components – essentially treating each one as a pixel in its own right – you are able to create a (just barely) legible font.

Here is a link to a magnified version of a sample written using sub-pixel manipulation.