Using Blender 2.89b. EVGA GTX1070. Win10. All non-default add-ons disabled and new scene loaded.
Attached demonstration file contains a cube using a data transfer with max distance enabled to copy weights from a nearby plane, and an armature for that cube. Max Distance settings should put four verts in the domain of the modifier; as you can see, seven verts are affected.
Problem encountered in less abstract situations as well, this is just my simplest reduction of the problem in order to verify that it's an issue and make it plain to see and reproduce.
For reference, official documentation reads, "This allows to transfer a small sub-detailed mesh onto a more complete one (e.g. from a “hand” mesh towards a “full body” one)," which would be useful if it were working properly.