A display apparatus uses an LED array having an LED pixel pitch, having LED pixels emitting light with viewing angles θ. A transmissive diffuser panel is mounted with the LED array, having a directly-lit, diffuser panel surface spaced away from the LED array by an adjustable distance D. The distance D and the viewing angles θ being are effective to merge illumination from multiple LED pixels in the LED array on the directly-lit diffuser panel surface. A controller is connected to the LED array having circuitry to control the LED array in response to image data to induce display via the diffuser panel of a time varying image with spatially varying colors and intensities.