That's common. That knob creates resistance. Think of it in terms of distance. If you turn the knob all the way to the left, you are allowing the radios furthest away from you to come through. You probably can't talk to them, but you can hear them. In many situations, that's less than 2-3 miles. If you turn the knob to the right, you're choosing to hear radios that are closest to you. That's usually less than a mile, and is used when you're convoying and want to talk on a busy channel. A tuned (read: maxed out) radio could possibly reach 5 miles or more, but that's line of sight. Mountains, trees, and buildings will affect the overall range. If you're out in the country, you will probably not hear much communication.
Regarding clarity, it's also common to get a lot of static during comms. Some radios have beautifully clear transception, with good quality components like a high-end microphone. Most people never buy better parts. That's not to say that the mics that come with the radios aren't good - theyre just "ok"; good enough. You can tell when a high quality setup is used.