Actually, even on gigantic it is almost impossible to be "out of range". The ais at maso get a +1 range bonus (or was it +2 ?) and research the +1 range tech before you have finished settling "your" cluster. I know I can usually reach other clusters with my colony ships, even if I decline to, so they most certainly can.
Also, on gigantic, there is almost always a resource part of the way, and the ais are good at grabbing them, which also extend their reach.
However, with the right starting position, you can take the sectors it might be able to reach before they get to them, and settle the others at your leisure. Once that is done, the ais are in no hurry to make contact with you.
So the benefit is not that they can't reach you, because they certainly can, unless you have a very strange map. It is that they are in no hurry to do so, and the distance protects you from culture flipping early on. (I once tried "sharing" a cluster, rushing to the common border to mark "my" part of it, and saw my planets start to flip as soon as I built them

)
One last remark : I think more points for gigantic is fair, not because they are more difficult to play, but because they take much longer. It is true that they have their good points, like giving you more time at the start, but they also have disadvantages : you can't take an ai out with an alpha strikes when it owns 30 to 40 systems for example, and when it comes to moving ships around you have to think long term.