why are the nozzles so far from the runner?
Doesn't matter how far they are from the rotor as long as the stream hits it right. If the stream falls a bit that energy from that head is still added to the water. (Air friction may be less than pipe friction, too, depending on geometry of the stream and the pipe.)
Having said that: Yes, the usual practice is to have the nozzles closer to the runner. That way if the head varies the stream still hits it right.
To my very uneducated eye, there appears to be a lot of wasted water pressure.
Where?
The water emerges from the nozzle at a speed dependent solely on the pressure at the opening. As long as there isn't some nasty discontinuity in the plumbing to create turbulence, or a narrow enough pipe that the friction with the water is significant, the pressure is proportional to the head.
Neglecting such losses the water emerges at the same speed as if it had fallen the distance from the upper surface of the water at the inlet - the same speed necessary for the jet, if it were directed straight up, to rise back to that previous surface level before falling back down.
The amount of power in each unit mass of the water is the same regardless of the nozzle size and flow rate. So adjustments to the nozzle size (or number of nozzles working) control the flow rate and thus the rate the water is consumed and its energy harvested, without wasting any of it.
At least to the first approximation.
Using large pipes with these small nozzles is better than using small ones. It reduces the pipe friction. (It WOULD be a little better to taper the nozzles from the full pipe diameter down to the jet diameter. But with the jet so much smaller than the pipe the flow rate should be small enough that I don't think there'd be a lot of loss at the discontinuity near the entrance to the nozzle.)
