The middle slider is a pure gamma (power) function between levels 26-255. It transitions from there down to level 16 and finishes as a linear function from level 16 to 0.
This is done to avoid an infinite slope of the input/outout curve at zero input, which a pure power function produces.
To say that the modification "damages" anything implies that the system/monitor response in the deep shadows is well behaved and itself follows a pure power curve---and nobody knows that to be true.
For the levels middle slider (or any of the other tools, for that matter) to correct system/monitor non-linearities, the non-linear behavior being corrected needs to be known. In the deep shadows it is not known. So one extrapolation is as good as another.