Yes, this was reported for 770 http://bugs.maemo.org/show_bug.cgi?id=375 and it is constantly getting worse. Let's wait for real N800 image maybe n810 has different screen so this in not final.

But anyway I really don't know what's wrong with normal slider allowing full range. This is so microsoftish (i.e. they know better what you want). And the new OS even nicely fades into one of the five (!!) predefined levels showing you it is possible but you are simply not worthy to have your own level. Luckily the solution is (relatively) easy with custom kernel http://fanoush.wz.cz/maemo/#backlight but one simply wonders how this is possible and who does such decisions and why.