As I understand it mouse attacks are  just that they are not move and attack so if the target is out of range the the basic swing attack will miss, they will attack air.

The same with holding the lmb after the target is dead you are still using the basic swing attack, as there is no target it may seem you are attacking a dead corpse.

The direction of attack confused me to start with, the lmb is the attack the position of the cursor is the direction of attack, so you have eight attack directions depending on where you place the mouse cursor, I think the engine does compensate for a little inaccuracy so it seems if you are attacking North then the attacks will also do targets N West and N East.

The hit box for attacks is pretty large to compensate. We can tweak it before 1.0 though.

There is an "aim assist" variable used by the engine, but it's kind of hard to explain how it works. It's easier to understand with bows and arrows instead of melee attacks. It's the pixel distance between where the attack appears in the air and its actual (x,y) map position in 2D floor space.

The game Bastion has a good solution. They display an imaginary line where the arrow will travel relative to the ground.

I'll be thinking of ways we can give similar player feedback so they know exactly what is going on with aiming.