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The flag/no flag issue might be an aspect ratio signal, to tell the display device the aspect ratio of the source, so it can correctly apply whatever settings you've entered. There's also a copy flag, and likely numerous others buried within DTV...
In your test signal scenario, keep in mind too that you don't truly have an analog "spread" of possible signal values. You have an analog representation of stairstepped digital levels. Take for example "banding", commonly seen on sunsets or gradated backgrounds. When coming from an truly analog source, there is a smooth gradient of values from light to dark, for example. To decide which of two neighboring digital values to display, decisions have to be made by the circuitry, and compromises taken. With a digitally-originated signal such as yours, there are discrete values, and no "middle" values between the possible digital steps. Decoding circuitry doesn't have to figure this out -- it just displays what's there, which already "fits" the display. (Kind of a "no dithering" approach, although I'm not sure dithering is the right term.)
A good comparison would be a true analog signal, compared with a digital signal of the same image. Not an easy pair of signals to come up with "in the wild" though. You'll wind up testing the cameras more than the display.
Chip
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