How reliable is battery health/capacity number?

how reliable is the IOS battery health figure? here's why i ask. i have a "for parts" iphone 6s that wouldn't turn on. after futzing around with a couple of DFU restores and a new battery, i was able to get it running. the battery i pulled out was a 3rd party, and i confirmed with the seller that it was newly replaced (yeah, took that with a grain of salt).
when i put that battery into a good iphone frame, charged it up for 24 hours and it powered up. the battery health showed 100%. within 10 minutes it dropped to 80%, then down to 2% within 5 more. i power cycled the phone and it went to that battery frame with a sliver of red and the "plug me in" animation. checked the next day and it was at 100% charge, unplugged the power cord and it dropped to 1% within minutes.
do batteries just do this? even though IOS says that it can take a 100% charge, can the battery still be crap and not hold a charge?
does the battery health really take into account the battery's ability or is it based on some other factor?
thanks.