ATIS is based on the METAR, with extra local info added. METARs are created by the Wx people and are based on either automated reports (non-towered, see below) or on tower controller reports. If a human observer is involved, assume that they will apply some common sense. There is no set radius, and some METARS are generated at non-airport locations (they are used for puropses in addition to aviation). My home patch is near the coast and the marine layer frequently parks about 500 off the end of the active...they will call that CAVU because the layer is not yet over the field and will not affect landing legalities. Based on this, I would assume that ATIS covers the airport property only
AWOS/ASOS pretty much looks straight up, and it can be 100% wrong if there is a single cloud parked over the sensor, or worse if there is a little hole in the deck right over the sensor.