I believe I figured out suppression:
You get about 0.2 of the total suppression value in the province where the troops are.
You get about 0.1 of the total suppression value within a radius of 2 provinces from your troops, regardless of the amount of provinces that are within the radius.
This applies for all types of troops.
Although there seems to be some rounding issues involved, for example -
Kursk: 2Gar, 2MP(upgraded to 7 suppression) = 18 total.
In Kursk proper: 3.59 RR reduction
In surrounding provinces: 1.79 RR reduction
In provinces surrounding those: 1.79 RR reduction.
Interesting side effects:
-Troops in coastal provinces: The sea zone acts as a connection, so all coastal provinces that touch the sea zone are considered within range of the troops. See one messed-up situation here:
-The suppression does not cross borders.
In the above picture the Romanian troops don't apply their suppression in German occupied territory and vice-versa. I confirmed this where a border has occupied provinces on each side.
-Any allied troop will apply their full suppression value wherever they are located, regardless of who occupies the province.