Why does the range appear further than actual when aircraft are flying directly towards me?

It depends on the other aircraft’s transponder antenna type. Some types of low-cost blade designs have a flat metallic antenna element which provides a uniform gain except in the 10 degree field, but follows a indent in gain in the forward lobes. The gain reduction will show a approximately a 30% reduction in range. In other words, an aircraft at 4 NM would indicate 5, 2 NM would indicate approx. 2.6, and an aircraft at 0.5 NM would show 0.7 NM.


Example of typical transponder output with blade-style antenna.

However, not all aircraft use the same type of transponder antenna, so this effect is limited. "Stick-and-ball" type antennas are not usually subject to this effect and are more omnidirectional in output.