I think they must have been occupying the same space, as I'd see 8 missiles exit of of the missile banks, then 8 missiles spinning to the target - they must have been overlapping somehow.
When my ship is firing at a more distant target - as I tested last night - I can see what looks like one set of missiles (8 warheads) spinning towards the target. Only when really close, and the missiles appear to scatter, are there a lot more warheads visible.
This became very clear when my Skirnir quickly finished off some fighters then targetted the Xenon J that launched them. The individual warheads were indeed overlapping as they approached the target in formation, so to speak, but when they broke up and actually started hitting the target there were loads of them.
So, looks like the missiles are working as planned, but visually they're overlapping perfectly. Never noticed this behaviour before, but then I rarely use M7M's as I consider them a little OP. Getting this one free - a very lucky early-game bail - already stuffed with missiles lead to me playing around more than usual.
Basically Cycrow, you nailed it - that was exactly the issue

Scoob.