Simple SQL Update Query behaviour changed based on table volume.

Here is an interesting case for you, please read patiently to understand the simple update with strange behaviour.

I have a two table with very minimal records and i am joining with referential integrity to update the value from 1st table to the second table's column. the update Query behaved differently when records increased over a time. its very simple update Query and the results are very strange. I will brief the scenario step by step as follow.

Table 1: Warehouse