That’s how it works. Retention settings lets you customize. Keeping all versions can be too much.
See Choosing files to restore and look at Restore from
date.
If you want an older version date, pick it from dropdown there.
So you get to some old file version by starting at backup date.
There have been some ideas for enhancement to that design.
This was suggested too, and I see that you did so in below:
If I misunderstood original questions, please clarify, but I don’t have Time Machine to compare. Some other people may be able to help, but I doubt that UI could ever be completely the same.