Why is git apply of a patch with binary files not creating the binary files?

The --binary option is used when you create the patch file, not when you apply it.

That means, instead of your current git diff branch1 branch2 > patch-file, you have to do this instead: git diff branch1 branch2 --binary > patch-file. And, then, apply the patch with git apply patch-file in the same way as you’re doing.