If you look at the definition of time value on Wikipedia, you may notice this line: Time value "can be thought of as the price an investor is willing to pay for potential upside."
https://en.wikipedia.org/wiki/Option_time_value
You are right to think that the time value is increasing as the moneyness increases from deeply OTM to ATM. Once the moneyness crosses the strike price threshold, per wiki's interpretation, the upside potential decreases as the underlying price moves away from the strike price. Hence the willingness to pay for the upside potential decreases.