At first I also only found the left/right adjustment dial (or cog) on the backside of the headlight. But then found that there is another cog as well, which adjusts it up/down. (See the attached photo.)
I managed to adjust both headlights downward, so that now I can use setting 0 without other cars flashing their high beams at me as often. But that adjustment moved all other settings (1, 2 and 3) downward as well, so the large gap between settings 0 and 1 still persists.
Wow, very interesting!! That cog seems to be in a really unfortunate and uncomfortable position! Were you able to adjust it by turning it blindly? I'll try to look, but I seem to recall there being very little room in the engine compartment. However, I think I'll try for now with the height set to 0 and the focal centers of both headlights angled quite a bit toward the edge of the road (to the right, because I drive on the right). I'm a little concerned about what you said about position 1 lowering even further, and it's already quite low...
I have the larger alloys/tyres, but wouldn't imagine they make a difference.
What size wheels and tires do you have?
Is the Jazz similar to this
No, it doesn't look like that headlight at all, unfortunately.
Don’t tell me….you let 5psi out of the front tyres!
I usually drive alone and keep the front tires at 2.8 bar (I think 40.6 psi) and the rears never at more than 2.5/2.4 because I've noticed that the tire's shoulder doesn't touch the ground (36.2/34.8 psi). I don't think this affects the height of the headlights much, because most of the car's weight is in front and completely presses the wheels to the ground. At least that's my driving experience.