When I put the image in the uploader (and add the date and location) I get basically the same suggestions you do, although slightly different:
If I remove the “seen nearby” restriction, I get a better top result:
Sometimes you’ll want to remove that restriction, as there could be visually similar species to what you uploaded, but none have been posted to iNat nearby. I don’t think this is a bug.
Yes, the community ID is taken into account when suggestions are given.