It sort of translates to physical range, but not really. It's more like just a dice modifier, as others have said. One could consider every +1 of reach to translate into an extra meter of close combat range, but then you start getting some odd game situations that really don't serve to enhance play.
OTOH, treating as strictly a dice modifier can ALSO lead to some bizarre game situations. Such as a troll with a polearm not being able to attack someone 4 meters away who has a pistol, and that fella with the pistol not getting the "attacker in melee combat" penalty. Some common sense might help clarify specific situations (for example, troll facing the other way) but, in general, I'd say just give it the dice modifier.
