The TPS74401 is designed to have transient response within 5% for most applications. In some cases, the transient response can be limited by the transient response of the input supply. This limitation is especially true in applications where the difference between the input and output is less than 300mV. In this case, adding additional input capacitance improves the transient response much more than just adding additional output capacitance. With a solid input supply, adding additional output capacitance reduces undershoot and overshoot during a transient at the expense of a slightly longer V_OUT recovery time; see Figure 5-33 in the Typical Characteristics section. Because the legacy chip is stable without an output capacitor and the new chip is stable with output capacitors ≥ 2.2μF, many applications can allow for little or no capacitance at the LDO output. For these applications, local bypass capacitance for the device under power can be sufficient to meet the transient requirements of the application. This design reduces the total cost by avoiding the need to use expensive, high-value capacitors at the LDO output.