form 8606 line 10 why does non deductible basis depend on account value?

Many years ago I contributed to a non deductible IRA for a few years. I always believed that my contribution (basis) could be removed without taxation.  Last year I removed the value of my basis and I don't understand form 8606.  It requires the value of the ira accounts and then calculates a ratio based on that value and limits the non deductible portion to the "portion that I did not convert to a Roth IRA". I did not convert anything to a Roth, and why does the value of the account matter when I am just recovering my cost basis. I feel I must be missing something but it is only allowing less than half of my basis as non taxable and I don't understand why, not to mention I am under 59 1/2 so subject to penalty for something I believed would be tax free.