As I understand it, both from ingame experience and snippets picked up here. You will spawn at roughly the set range from whichever contact is identified as Sierra 1, however they may move towards or away from you before you are able to get accurate TMA on them, and there may be closer contacts that you didn't detect immediately. The close range does help to increase the ability for you to reacquire the target after you spawn, but also has a risk of spawning you within detection range of the contact.
I've found it is still useful to be able to decide on the fly whether or not to close on the target, for example, if the enemy catches me running at full speed, I'd rather be farther away then if I'm drifting while hunting an SSK.
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