It's behaving how I would expect it to
You can't just move it up and down and expect to see a change, the gauge is software driven, no doubt if you could read the body computer directly it would indicate the actual float level
But the gauge will not
Here fiats explanation
In advance of the Service Manual update we are enclosing the notes (1 and 2) on the fuel level gauge system operating logic
Note 1 - valid for all models
The fuel gauge on the vehicle uses a strategy designed to ensure that the reading in the instrument panel is strictly correlated to the mass of fuel effectively in the tank and is barely influenced by such external factors as:
-the fuel splashing around (whilst driving);-vehicle manoeuvring and/or positioning whilst driving/parking (errors due to parking on an incline, slope, etc.).-long ascents/descents or long bends, etc.
However, if these external factors persist, this could produce instrument panel readings that are not totally in line with the actual quantity of fuel (which will, however, in time, be correct).
Note 2 - only valid for the Panda 169 - Idea - Stilo - Doblò - Punto
For the "Panda 169 - Idea - Stilo - Doblò - Punto" models only the fuel gauge operating logic ensures that the reading is updated each time the ignition key is turned ON and only following an increase/decrease of around 5 litres of fuel, in relation to the condition memorized after the engine was last switched off.
Therefore it is natural that the instrument panel reading will not change if less than 5 litres of fuel is introduced.