How do we know that an emergency descent was not initiated, making the groundspeed lower and the range much less? The latest ATSB report doesn't appear to discuss that possibility?
There probably several things that could increase the size of the search area but it's already vast. It seems to me sensible to make some assumptions to narrow it down. If they don't find anything they can always widen the area later.
Edit: The assumptions are on page 21.