Simple answer: Line of sight. You were at altitude. A weak ELT a long ways away from the ground stations (often with RF absorbing "stuff" in the way too) won't be heard by them, but you'll hear it easily.
Sadder thought: I've had to tell certain local towers (who's airport identifiers shall remain anonymous to protect the non-innocent) to turn up their 121.5 receiver before saying they "couldn't hear it", when I knew it was on their field.
Altitude trumps all at VHF and above... our Amateur Radio FM repeater transmitter near Colorado Springs has blown an RF power amplifier and is operating on exciter power only, of roughly 250 milliwatts. It's 3000' above average terrain on top of Cheyenne Mountain (yeah, the mountain with the old NORAD stuff inside of it) and the repeater is weak but perfectly copyable 30 miles out down on the ground. No problem at all.
You're experiencing the opposite, you're up high and the transmitter is down in the weeds.
There are ways to pin-point that transmitter from the air, even without fancy gear. Look up "wing-null" method if you have antennas centered either above or below the fuselage where the wing crosses it. A couple of "nulls", a chart, a couple of crossed lines (maybe four if it's a particularly difficult ELT) and you'd be able to chart exactly where it was and fly to it.
It's becoming a lost art in CAP and elsewhere, but it still works. Block the antenna with the wing between the transmitter and the aircraft's antenna, and the signal drops... go figure. Plot a line 90 degress to the aircraft's direction at that point, and you'e got line number one... fly a ways off, turn 30-45 degrees and do it again... a couple of lines will put you right over the top of the thing, usually.
Physics and all that rot.
Statistics show that there's probably and airport underneath you when you do that, too. False alarms are well over 90% of the activated ELTs...
