Why does Airdrop on OS X only work in close proximity? We're all connected to the same WiFi but other computers only show up in the Finder when they are close by.

According to this Mac Basics article, you need to


have Wi-Fi turned on
select AirDrop in the Finder
be in close proximity (“AirDrop is designed to work within a range of approximately 30 feet.”)


(emphasis mine)

What's the technical explanation for this requirement?
It uses Bluetooth to look for nearby devices.
You can read more about it on AppleInsider:

It should be understood that AirDrop is a proximity-limited technology, meaning that it will only work when two or more users are near each other. This is illustrated by the requirement that a compatible device, which will be limited to the iPhone 5 or later, fourth-generation iPad, iPad mini, and fifth-generation iPod touch, have both Bluetooth and Wi-Fi enabled.
When AirDrop is activated, it uses Bluetooth to scan for nearby devices that are advertising discoverability. User can elect to be seen by everyone, only by contact, or not at all if the feature is turned off.