You are currently playing on a non-dedicated server, or using the split-screen function, which are both methods of the game which enable you play local co-op. Due to the fact that you'll be able to host a server and play at the same time, there is a limit on how far survivors can travel from one another.
Currently this is set to approx 250M, as well as a limit on the amount of players that can be online at once, which is the host + 7. With further optimization we may be able to increase these limits but only time will tell for now.
These aren’t limits we’ve intentionally put in place to make the game less fun, but instead to provide those of you who want to play locally with friends, the option to do so - without the need for a second xbox/PS4.
Joining an Official Dedicated server or a Player Dedicated Server will allow you to get past these limitations as they solely host the servers and are freed up from having someone play on them.