You have three mpg figures - current calculated mpg, average mpg of current journey (resets after two hours of no driving), and average lifetime mpg (is manually reset).
As far as I can tell, the estimated fuel range is based on the average mpg of the current journey. As an example, let's say I do some hard driving and the average mpg is something like 20mpg. Then let's say I fill up the tank. The range may be something like 240 miles. Let's say that I then drive like a granny, average 40mpg. The range will now increase to 320 miles, despite the fact that I've already driven say 20 miles.