Jagged Landscape from Heightmap

Heightmaps aren’t grpahics. They are data.
And using photoshop immidiately means you loose data. Such as the required data to have steps be smooth.

You never use any visual editors on heightmaps - unless they natively support 16bit. And even then. You usually just don’t.

Regardless of that, the issue could just be the direction of the cliff against the landscape.

Go in mesh mode (vertex view?) And check to see if the cliff positioning is how you actually expect it to be, and not going across several quads.

Generally, each pixel matches a vertex.
And if you did modify in photoshop, you have no guarantee the height value across all pixels is correct…