Mach will move to the nearest step it's capable of, and that is what will be displayed in the DRO.
For example, say you have a step resolution that works out at 0.3mm (very crude, but it's only an example), and you command a move of 1mm, the nearest position Mach can command is 0.9mm. Although you command 1mm, Mach is intelligent enough to know it can't command that exact position, so it rounds to the nearest position it's capable of.
As for your Z problem, if your DRO is showing the axis moving in the correct direction and the machine is physically not, you have either a Mach configuration issue, or an electrical/mechanical fault. If the DRO isn't showing the move in the correct direction, then there is an issue with your g-code. As Rich said, the controller i.e. Mach, only does what you tell it to.