This is a post by Mule Deer (John Barsness) from a thread about bullet seating depth here not too long ago:
You're missing a couple of things. While pressure starts to build as soon as the primer ignites, it doesn't rise nearly as rapidly until the bullet hits the rifling, due to the force required to engrave the bullet. Seating bullets deeper essentially results in a longer throat, giving the bullet more room to accelerate before engraving on the rifling.
This is exactly why custom chambers for Weatherby cartridges that eliminate the longer "freebore" result in much higher pressures: The bullet hits the rifling much sooner, and pressures skyrocket. The freebore results in a flatter pressure curve.
The same effect is created by seating bullets deeper, which essentially increases case volume, rather than decreasing it as you suggest. The "pressure vessel" is essentially the entire chamber, to the beginning of the rifling, rather than the space occupied by the powder to the base of the bullet.
Second, modern rifle powders are progressive-burning: After ignition they burn slowly, due to either granule size (large granules have less surface area for their volume) or burn-deterrent coatings, or both. As they continue to burn, they burn faster--but by then the volume has increased considerably, due to the bullet being further down the bore. Like a longer throat, this flattens the pressure curve.
The opposite effect is usually seen in handgun rounds, where seating bullets deeper increases pressure. First, many if not most handgun powders are degressive-burning: They start off burning very fast, then slow as the burn progresses. Seating bullets deeper encourages this initial fast burn, increasing peak pressure. Handgun chambers also have very short throats, especially in semiautos.
John