Often, a player will get into a bad habit of getting too close to the ball. In general, it is better to reach a little to get the ball than to be too close. Just like batting in baseball, you get more power on a pitch to the outside of the plate than inside the plate (too close to the hands).
You will improve your serve and overhead if you extend to get the ball, rather than the ball falling on top of you. Watch the top servers in tennis and see how high they throw their toss and how high they make contact.
Go get your volleys and extend. Do not let the ball crowd you. If the ball crowds you on a groundstroke, step around your backhand and hit a forehand like the pros.
Staying away from the ball helps you "square up" to the ball, getting your racket head parallel with the ground rather than "shoveling" the ball, where your racket is not parallel to the ground on contact. The best thing about getting away from the ball is reducing shock in you arm and shoulder and reducing the chances of tennis elbow.
Good luck on the courts!