Yes, tab targeting is compete trash in this game.

From what I found on the web, in 1.0 it use to have an option where if you're in combat then it would only cycle though mobs you're in combat with. That seems to have been removed in 2.0. Seems pretty stupid to remove something like that.

Not in combat: tab should target the closest mob then cycle out from there.
In combat: tab should cycle though your enemy list from top to bottom.