Your confusion probably arises from adding gravity directly to position, which is physically incorrect.
(the stuff below is just basic physics of falling, I don't have URLs, but I'd be surprised if there are no sites explaining it)
Gravity is a force, not a speed.
The force increases the speed, and the speed makes you move, ie there are two steps involved here.
g=10 # gravity constant
v=0 # vertical speed
y=0 # vertical position
dt =0.01 # time step of 1/100 second
v = v + g * dt
y = y + v * dt
This makes you fall increasingly faster, which is basically why falling from a chair is not the same as falling off a building. The forces involved to reset the speed to 0 at the bottom are too large to handle in the latter case.
If you do this from an air plane, then the speed will grow so large that air-drag plays a role. Air-drag is the resistance force of moving fast through air, like sticking your hand out the car while driving fast.
The air-drag force counters the gravity force, so in the end they cancel each other out, and your speed does not increase any more. This is called terminal velocity (ie it is "v =v+(g-drag)*dt" where 'g' is constant, and 'drag' increases with speed).
Terminal velocity is around 200km/h for a human falling through air while in horizontal position (like all the freefall sky divers do).
But as others and yourself have already said, reality is often too boring to incorporate in a game. Use physics that work in the game instead.
Edit: Let's have a 'code' box to preserve white space.
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