I don't know the distances in relation to the reports. From what I have read, hydrophones could pick up a single ship at up to 7 NM and convoys up to 50 NM. I don't know exactly how this is modelled in the game.
When you get a hydrophone bearing, that is only where the contact is in relation to your sub. If you are heading North (0') and a contact is at 90' that means it is currently at your 3o'clock. You should stay submerged and ask your hydro operator to follow the contact and determine where the contact is going. This will only take a few minutes game time. if thew contact is reported at 91,92,93. It is probably moving in the opposite direction from you. This is only part of the game. You do not know exactly what direction. Your report may also tell you if the ship is closing or heading away. That will give you another piece of the puzzle.
Once i get a contact , I generally turn to directly face the contact and then monitor which way it is moving. Then i will surface and head down a bearing that puts me slightly ahead of the direction of travel of the contact. I attempt to intercept for 20-30 minutes, then resubmerge and again establish hydrophone contact and start again. This can go on for hours, especially at night and in poor weather you can sail right past them, or even into them! nothing quite like chasing a contact in bad weather for hours only to find it to be a neutral ship or a 185 tonne trawler not worth wasting a torp on and with swells too high to use the deck gun.