Hm. On my sound card, at least, Loriel is quite right. In weapons, however, it just plays the sound full volume.
Try this script if you want to see how your computer handles Graal's sounds and distances.
NPC Code:
//#CLIENTSIDE
if (playerenters || timeout){
swordplay={int(random(0,63)),int(random(0,63))};
message sword sound played from #v(swordplay[0]),#v(swordplay[1]) with play2: bomyload0 sound played using play;
play bomyload0.wav;
play2 sword.wav,swordplay[0],swordplay[1],1;
timeout = 0.5;
}
You'll notice that play2 lets you control whereabouts a sound is being played from. Play does seem to take the position of the NPC.