Surely these measurements will make my handrail look wonky?

The mid point of each will be different but i would expect that the inside measurement at each end will be equal. The midpoint difference will also depend on the angle of the stairs.

I think the diagram may have over exagerated the difference?

Correct me if Im wrong

Yeah that diagram is off their website and the measurements are from the instructions. ~6cm seems a big difference.

If for example its a 45 degree incline, for ease of calculation and the upright is 6cm wide.

The mid point would be 3cm from the inside at each end, which would give your 6cm total.

no because the top post wont be as long as the bottom post...

You have the the diagonal length & the front post starts at the underside of the length & the top post at the upperside of the length

Cheers, it makes sense now - you hold the two posts together and draw the string line on, the 201mm lines up with the 264mm.

I was thinking it was something to do like with how door hinges arent equal heights (Ie the top hinge isnt the same distance from the top of the door as the distance between the bottom hinge and the floor) due to perspective?

The top hinge should be closer to the top anyway, this reduces stress on it. The bottom hinge supports half the weight but it acts as a pivot, putting more stress on the top one.