Honestly I don't think ships should explode in space, as unless the ships are actually touching there's no transfer of energy. So maybe it should be changed to fragmentation damage instead of explosive and have the hitbox reduced?
It is possible that the ships are transferring energy through radiation similar to a small supernova therefore with a very good chance of damaging other ships.
I'm also going to add that if there was fragmentation damage it should probably be randomized as fragments have no reason to slow down ins space....
regardless, small supernovas would indeed do quite a bit of damage.
Spaceships should be able to deal with small amounts of small fragments with a high relative velocity, there is still some stuff flying around in space. And since the fragments should spread out in all directions simultaneously, the further away from the explosion you get, you will get hit by a smaller amount because the amount of particles and radiation decreases with the square of the distance to the source. So, while not completely accurate obviously, it makes sense to declare that at a certain distance, you are safe.
I don't think we know any details about the propulsion technology in Starfarer, but usually, the fuel source used for propulsion is designed to release energy, and it is not unreasonable that it would be able to explode, too. And since ships are also full of air, i don't see why there shouldn't be a nice, large shiny explosion. The only thing a space explosion does not have which an earth explosion has is a shockwave besides the propagation of the fragments, because there is no medium to propagate it in.