I see. I hadn't used this feature of FEFLOW before, but looking at the help file, the "ideal element size" seems fixed regardless of the pumping rate. When I change the well radius (which is the radius of the vertical pipe element feflow internally assigns), the "ideal" radius changes, but the rate has no effect on the "ideal" radius.
However, the larger the pumping rate, the larger the hydraulic gradients at the well node and associated pipe elements, which to me means that elements have to be smaller (nodes closer together) to get an accurate simulation of heads in and near the well.
The help file states this: "Due to spatial discretization in numerical modelling, the hydraulic head resulting from the simulation at the well nodes themselves highly depends on the size of the elements around the well location. "
So while I don't understand why the ideal radius isn't also a function of the pumping rate, it is clear to me that smaller elements are needed as the pumping rate increases. In any case, the way you describe your problem leads me to think your node spacing (and hence element size) is too large.
You basically tested this when you put nodes closer to the pumping well. your result was more drawdown, which is exactly what I would expect with a more accurate simulation. The drawdown wasn't over-estimated in that simulation, it was more accurately calculated. FEFLOW is simulating an ideal pumping well but your field data comes from a realistic (non-ideal) well.
Pete