When something is pixelated it is divided into pixels; enlarged so that individual pixels are visible; made up of a small number of large pixels to disguise someone’s identity (used on TV) [source].
When someone is pixilated they are behaving in an eccentric manner, as though led by pixies; whimsical or drunk [source].
The two words are easily and often confused.
Pixilated for drunk I believe is not related to pixis but rather to ‘pissed’ for drunk but a rather more polite reference in the same way that 200 years ago they said of the drunk”he hath seen the king of France”. As always of course I may be wrong.
Many terms for being drunk are discussed in the Horologican, mainly taken from a list compiled by Benjamin Franklin. King-related ones include “he has seen the French king”, “he is a king”, “the King is his cousin” and “he clips the King’s English”.
Other interesting ones including “he is drunk as a wheelbarrow”, “he has a head full of bees”, “he is wamble croft”, “he has buttered both eyes”, “he has made too free with Sir John Strawberry”, and my favourite, “Sir Richard has taken off his considering cap”.