I find the Papilio 6.5x21 sharp out to about 100 yards, and then it falls off in resolution. It is a big reason I never liked them for general birding. For closeup birding and bugs they are fine. I think it is because the optics are optimized for close up viewing that it is not as sharp at long range. i find almost any small compact better at longer distances than the Papilio. Here is a review from Amazon.com just to show I am not alone.
"3.0 out of 5 stars Poor distance viewing
Reviewed in the United States on April 7, 2016
Verified Purchase
I must have read the description wrong; I thought it would work for long distance viewing as well; but I could not see detail of a bird flying or in a tree in my neighbor's yard. I had to return the product because it wasn't quite what I wanted; poor distance viewing on the Pentax Papilio ll."
What I've noticed is that the optics of the Papilio II 6.5x21 are great even for distance viewing, and that one has to take into account air turbulence.
For example, now that summer is heating up the ground and buildings, I've seen image degradation just due to looking at something close by over a small patch of dried wheat ready to harvest!!
I suspect that the optics are not - as you suggest - only optimized for close up viewing. This statement doesn't make any sense as far as I've been able to investigate.
For example I use a lot of prime lenses for photography and macro photography and to the best of my knowledge there are no design parameters in play for lens curvatures that depend on distance - in fact, I typically use the same lens for 'infinity' and distances of less than 5cm for macro work, with no resolution loss (easily verified by MFT plots by the way).
So if we take into account the minimum focus distance of 50 cm for the Papilio I have not found any technical resources that lend support to the idea that the left and right eye optic path in these binos are using lens designs that would compromise their resolution as a function of focus distance.
Another fact is that the resolution of a 21 mm diameter objective lens is less than that of a larger lens - this is well-known to astronomers and explains why larger telescopes are used to get better details in images.
Comparing a 21 mm to even a 30 mm objective lens is not a valid comparison - just the physics will limit the resolution of the smaller sized bino.
Summary: in the class of 21 mm diameter objective lens binos, the Papilio II is most likely the most versatile and optically top-end performer available, I would go so far to say that it is technically superior to most roof prism designs in that its average transmission value is 90% over the visible spectrum due to the fully multi-coated lens and fully multi-coated Bak-4 porro prisms. And the 50 cm close focus puts it in a league where it is the champion bar none. (Just try buying that transmission value in a roof prism bino! You can, but add the 50 cm close focus distance and suddenly the supply is down to zero, no matter the budget available.)
TLDR: Papilio has excellent distant viewing, only limited by the physics of small diameter objective lenses. Comparing to 25 mm or larger lenses is a meaningless exercise as Dawes' limit comes into effect. But if you're looking for that WOW! factor every time you discover the 'macro' world and want to see how others experience it too in 3D full stereo vision with excellent color fidelity, bokeh, contrast and detailed resolution this is the kit to do the trick. And it also has the best resolution for distance viewing allowed by physics (also with excellent color fidelity, contrast and all the details possible for 21 mm diameter lenses).