Tesselation sine distortion?
Not enough triangles. The situation is analogous to the sampling theorem that states that you can not reconstruct a signal if your sample frequency is below a certain threshold. Although in this, case you're not attempting to rebuild the signal with a higher order filter so the result is even more dramatic. And it results in interpolation errors.

You can alleviate the problem with less points if your point wavefront follows your waves. So you may want to shift points towards the gradient maximum in other directions than UP.