Is my setup way off?

Like @matthew.weigel said, most “dumb” trainers will have a somewhat meaningful reported distance because the resistance applied by the trainer scales proportionally to wheel speed at a rate that attempts to emulate a flat road. In erg mode, your gearing never changes, so your cadence is the only thing changing wheel speed. Thus 90 RPM at 100W will look just as “fast” as 90 RPM at 300W, the trainer does not attempt to estimate your distance based on your average power.