The Mirror modifier works exactly "as it should".
Meaning it will mirror the geometry using the object's origin (that orange dot that you see in the girl's forehead) as the axis of symmetry. If your geometry is far away from the origin, the mirrored geometry will be as far away from the origin but on the other side of the axis.
Read the blender manual page to understand how the tool works:
As an alternative to using the objecct's origin, the mirror modifier can also be used with a control object. As detailed in this answer: https://blender.stackexchange.com/a/49355/1853