Hopefully the example below clarify how to use the different flags in the Bump channel. Sorry for the art style
Using rockwall.tga & rockwall_NH.tga at https://nas.talansoft.com/sharing/3pFs06PZv
With a normal map
You can use the alpha color of the bump channel to tweak the “strength” of the normal map:
You’ll note that while the shading is better than without any normal map its still fairly flat.
With a normal map + height map
You can use the color channel to tweak the per pixel extrusion:
Here you can note occlusion between the bricks in the wall.
The greyscale bump map (bump channel without the normalmap flag) is more like the “old school” bump you’d use in 3DSMax, it really only works well with shallow normals and just to add some “edge” to the lighting - usually by plugging the diffuse directly as bump or some quickly made greyscale version of it. Its not really the best for high quality normals but it can do the job in some cases - as its better than no bump. See below for a quick example - using some tree bark texture.
Note that using a height map with a greyscale bump doesnt really make sense in general - although you can do it technically.
With bump (using the diffuse as bump):