8k heightmap gives me very weird landscape

Sorry, but it’s important for my workflow that it does in fact work - here’s some proof:

shows the 16bit version is different from the source data.

landscapes made from heightmaps made in photoshop.

It does default to using BC1 compression after importing which is 5:6:5 bit format - but you can change that in the texture editor to any of the 16bit formats without loosing data.