Probably because of the dim-dip relay. You can bypass it/fit a dummy one in its place as it is no longer a legal requirement.

Are both the side lights and dipped lights on when the sidelights are on (switch position 1).
Are the dipped lights dimmer at this stage than when the headlights are on (position 2)?
 
Probably because of the dim-dip relay. You can bypass it/fit a dummy one in its place as it is no longer a legal requirement.

Are both the side lights and dipped lights on when the sidelights are on (switch position 1).
Are the dipped lights dimmer at this stage than when the headlights are on (position 2)?
Yeah your bang on with what's happening
 
That's working per design then with the dim-dip relay. Its behind the instrument panel/dash if you're ever interested in replacing it with a dummy unit or bypassing it.
 

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