Understand the Heightmap

I do not understand the scaling for the heightmap. The values range from -256 to 255.992 with 16 bit precision. From my understanding, PNGs can use the uint16 datatype, but those values range from 0 to 65535. Is UE4 mapping these values to that range? I do not see any information on the exact transformation or datatypes for this 16 bit PNG. Is the PNG datatype supposed to be uint16 or something else? Also, I do not see information on scaling the x and y axes properly. I am trying to import data from a model and PNG is the easiest file format to generate. How do the pixels relate to x and y information? Thanks.