Terrain toolbox heightmap not working linear?

I was working with the terrain toolbox generator when I noticed the terrain that was generated from my heightmap, which is based on real life height in meters converted to gray values, didn’t correspond to what I had in real life.
The height at the lower levels were all squished together.

Because of this I made a test heightmap with simple greyscale values of 100%, 75%, 50% and 0%.
Expecting that the 50% value would be halfway between the 100% and the 0% in height.
However when I generate the terrrain I get the following result.


As you can see the 50% is way lower than halfway between 0 and 100%.
The heightmap was imported as a texture file, not a raw file.

My question is, how do values between 0 and 1 correspond to height in the terrain mesh?
Is this sort of quadratic behaviour I seem to get intended?
If yes, why?

When I look up what heightmaps are they all say values between 0 and 1 depending on the height of the terrain but no one specifies how those intermediate values precisely work.