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I think that is because the database of possible fares between East Croydon and Whitechapel does not have a “via Farringdon” option (or is it because the touch on the validator is disregarded, and the outcome would have been different had the passenger done an out-of-station interchange at Farringdon instead?). The default fare is zones 2-5. In order to be charged a zones 1-5 fare on this journey, you would need to do an out-of-station interchange at one of the stations defined on one of the three alternative routes. At present, Farringdon is not included as a possible interchange station in the definition of any of these zones 1-5 routes, hence you are charged zones 2-5 notwithstanding your touching on the validator at Farringdon (which is unnecessary, by the way, unless you were switching between a paper ticket and pay-as-you-go).
More broadly, there are a lot of journeys for which the default and alternative routes do not take the Elizabeth line into account. For example, Stratford to Abbey Wood has two defined routes, the default being zones 3-4 (I imagine the idea would be to go via Canning Town and Woolwich Arsenal), and the alternative being zones 1-4 (“Via Zone 1 changing between London Underground and National Rail at Blackfriars, Cannon Street, Charing Cross, London Bridge or Waterloo East (or Victoria or Waterloo”). An obvious route, taking the Elizabeth line to Whitechapel then doing a cross-platform interchange to get another Elizabeth line train to Abbey Wood is not defined (it would have been zones 2-4). Of course, given the lack of any out-of-station interchange, it would be impractical to distinguish between “via Canning Town and Woolwich Arsenal” (and thus zones 3-4) and “via Whitechapel” (and thus zones 2-4), so I suppose it is right and proper to make a presumption in the customer’s favour… unless TfL want to institute pink card readers at Canning Town and/or Woolwich Arsenal and require customers to use them for a “not via zone 2” fare (does such functionality even exist? As far as I am aware, pink card readers are used only to indicate “not via zone 1” fares for journeys where the default route is via zone 1).
Actually, on reflection, I suppose my Brentwood-Lewisham example is not that perverse. After all, going via the DLR is more convenient than via Southeastern.
The DLR option involves very regular service and fewer interchanges: Brentwood–>Stratford on EL or EL+GA (if doubling-back via Shenfield or changing at Romford to get a faster GA service); then Stratford–>Lewisham on DLR or LU+DLR (if going to Canary Wharf on the Jubilee line before changing to Canary Wharf DLR or Heron Quays DLR).
Conversely, the Southeastern option is more convoluted, and one leg relies either on a non-trivial OSI (New Cross Gate–>New Cross) or a not-so-regular LO service (4 trains per hour): Brentwood–>Stratford on EL or EL+GA; then Stratford–>Canada Water on LU; then Canada Water–>New Cross (only 4 trains per hour!) or –>New Cross Gate (8 trains per hour) on LO; then (having made the OSI from New Cross Gate to New Cross if applicable, which is a 7-minute walk in my experience) New Cross to Lewisham on SE.
Of course, once EL has through-running between the north-east branch and Paddington (due next month), the Southeastern option will get a bit simpler, since you will then be able to make a direct Brentwood–>Whitechapel journey on EL and change to LO at Whitechapel (instead of Canada Water). This could result in one fewer interchange (I say “could” because if doing EL+GA for Brentwood–>Stratford this would be cancelled-out by the extra interchange to return to EL for Stratford–>Whitechapel), and cut any need for the Jubilee line, although the gain is likely to be limited, since the Jubilee line is very regular and the LU-LO interchange at Canada Water (less than 30 seconds if you get the right carriage) is quicker than the EL-LO interchange at Whitechapel (minimum 2 minutes, I would say).
Glossary: DLR=Docklands Light Railway; EL=Elizabeth Line; GA=Greater Anglia; LO=London Overground; LU=London Underground; OSI=Out-of-Station Interchange; SE=Southeastern.
This anomaly has existed for years. Basically, the NR fare-scale for zones 2-9 is cheaper than the TfL-Ang for zones 2-9. If you look at the excellent webpage for the fare guides & tables, you will see that TfL-Ang rises very sharply between the zones 2-8 fare (£3·60 off-peak) and the zones 2-9 fare (£5·20 off-peak), thus “overtaking” the NR fare-scale (which stays at £3·60 off-peak for zones 2-7, 2-8, and 2-9). A particularly perverse illustration is Brentwood-Lewisham, where the fare depends on whether you go to/from Lewisham NR [National Rail] or Lewisham DLR [Docklands Light Railway].
In simple terms, as Mike has said, the NR fare-scale, when it applies, takes precedence over TfL-Ang. The key criterion for the NR fare-scale relevant here is “where part of the journey is on GN [Great Northern], SE [Southeastern], SN [Southern], SWR [South Western Railway], TL [Thameslink]”.
So, in my Brentwood-Lewisham example, the reason why Lewisham NR is cheaper (provided that you do not go via zone 1) is because part of the journey would go on Southeastern (specifically, between New Cross and Lewisham). Conversely, Lewisham DLR does not involve any of the train companies encompassed by the NR fare-scale, so it is charged according to the TfL-Ang scale.
In the OP’s example, the reason why Nunhead or Elephant & Castle are cheaper than Peckham Rye is, again, because part of the journey would go on Southeastern, whilst a journey starting/ending at Peckham Rye would not.
Brentwood is the only zone 9 station that is “native” to the TfL-Ang scale, hence why this anomaly is not well known elsewhere.
