My example above was an oversimplification. Many things may be at play there. The signal may be "compressed" to avoid hard clipping, but this is only a possibility.
In any case, my point is that the "extra" headroom in the sensor is not available to use, at least not keeping a linear response of the whole system (sensor + ADC)
I think you’re right, that compression is being used prior to the signal being sent to the ADC. This is how it works in the audio world, compress the high level signals prior to the ADC so that they don’t abruptly become clipped in conversion. That’s the thing with digital, it’s either there or it isn’t
. I note that my little Sony RX100 has the tendency to abruptly clip the highlights. I have to make sure I under-expose a little with high contrast subjects.
