You upgraded a weapon and 'only' got 10% more damage. You 'expected' more. Congratulations you have an opinion not a fact. If the same upgrade doubled you damage you could make the same claim you 'expected' more (or less). 1 ilvl doesn't translate to 1% damage in this game.

It's not broken.

SE decided how much gear will impact performance in order to pace content and character growth to match their vision of how people progress through the game. It's not broken, it's just arbitrary. They specifically stated they didn't want the kind of steep growth in stats of games like wow where you do millions of damage, so the stat growth is linear (instead of exponential) and measured. It's not 'wrong'. It's exactly what the devs intended.