Let's try with a real world example:

https://www.openstreetmap.org/way/245112355

This highway has 6 points, it starts in the north, the x-delta values (in resolution 24) are

4, -19, -5, 0,  3

The largest absolute value is 19 which requires 5 bits: 10011.

Since both positive and negative values exist, we have to encode the sign for each single delta value, so we have to use 6 bits (the leftmost gives the sign)

So, the first iteration gives:

6 bit words : 4 = 000100  , -19 = 110011, -5 = 111011, 0 = 000000, 3 = 000011   --> 30 bits

Now, the optimization process starts trying to use the "trick" with 5 bits. WIth the trick,

the value 19 doesn't fit into 5 bits, so the trick is used (it stands for the binary value 1111) and the result for -19 is 10000 11100  (15 + 4  made negative)

All other values fit into 5 bits, so the 2nd iteration gives:

5 bit words: 4 = 00100  , -19 = 10000 11100, -5 = 11011, 0 = 00000, 3 = 00011   --> 30 bits

The next step is to try with only 4 bits. Again, only the value -19 needs the trick, this time we get - 19 = 1000 1000 1011 (7 +7 + 5 made negative)

4 bit words : 4 = 0100  , -19 = 1000 1000 1011, -5 = 1011, 0 = 0000, 3 = 0011   --> 24 bits