/tag in functions broken

When attempting to tag things in the vicinity of a moving area_effect_cloud, it will tag all loaded entities in the world, instead of just the ones specified.

Replication: load new world. Summon armor stand tagged as Test. Put this command in function to be run every tick:

/execute as @e[type=armor_stand,tag=test,distance=..5,limit=1] at @s run tag @e[distance=..5] add TagMe

Now run:

/tag @e remove TagMe

All entities have been tagged, when that shouldn't be the case.