Why does Google Play Store show installed apps in the "Previously installed apps" section?
I surmise that because you can have multiple devices with the same account. It puts apps that were installed on a device in that section, regardless of them being installed on the current device or not. Though I do not see why they could not filter out apps that are installed on the device.

I would suggest that if you think it is an issue, you can report it using the feedback. Aside from that action, I do not think there is anything that could be done on the user side to fix this.