I had it too when using using the output in Terragen.
In my case 8k or 16k terrains can give stepped terrains in Terragen.
It seems that WM is doing some peculiar things with the vertical scaling.
Say you have a WM setup from 0 to 1000 meters in altitude, then it is not necessarily true that black = 0 meters and white is 1000 meters in your image/hf-output.