Of course that's not "good", but I think you'll find that it's not "that" bad either. You will be able to find errors from that if you want to turn out three foot long cylinders toleranced to a ten thousandth of an inch, but for most people, that bit of wear isn't going to show up in the work, it's going to show up as a missed variable that drives them nutz when they try to set up a new lathe which they've never run, and try to get the gauges to show four digit precision.
The method you're using to measure that- That's not right. On the other hand, it's gonna be pretty danged close. Here's another one that's "not right", but might be closer- Stick the saddle back on there (Not the whole carriage, just enough to slide back and forth, and make the lock functional.
Slide that to the rear part where you can see the flaking. lock the lock bolt. See where the wrench ends up. (Leave it on the screw, don't remove it).
Release the lock, slide forward a few inches, lock the bolt again. It should end up in the same place.
You will come to a place where you DO see some additional travel in that lock bolt/wrench pointer indicator you just invented. Use (or print from the internet, cut out, and use) a simple protractor to measure the "extra" degrees required to lock the saddle down in the worn area. The thread pitch and the degrees it moves will tell you how much the ways are dropping the saddle.
Extra degrees required "past" the set position on the unworn part, DIVIDED by 360, will give you a fraction (decimal) of a circle that your wrench
traveled. That number, TIMES the thread pitch will tell you how much vertical drop you're looking at. I believe that bolt is 5/16-18, (but I'm sure somebody'll call me out if that's wrong.) so the pitch would be 0.05555 repeating. For this, call it 0.056 and it'll tell you what you want to know.
honestly, while you "can" find small errors from that much wear, they are small, and most typically it's not likely that you'd be turning parts long enough, with a continuous dimension (continuous cuts) that are long enough for that to bother much if at all. This is a small lathe, so you will be measuring prior to final dimensions anyhow. Small errors usually get "lost" in that process...
FWIW, if it's any value to you, you can safely figure that wile there's some variation, the flaking marks on the ways are pretty much about half a thousandth deep.