Among the diverse techniques for monitoring soil moisture, capacitance-type soil moisture sensors are popular because of their low cost, low maintenance requirements, and acceptable performance. However, although in laboratory conditions the accuracy of these sensors is good, when installed in the field they tend to show large sensor-to-sensor differences, especially under drip irrigation. It makes difficult to decide in which positions the sensors are installed and the interpretation of the recorded data. The aim of this paper is to study the variability involved in the measurement of soil moisture by capacitance sensors in a drip-irrigated orchard and, using this information, find ways to optimize their usage to manage irrigation. For this purpose, the study examines the uncertainties in the measurement process plus the natural variability in the actual soil water dynamics. Measurements were collected by 57 sensors, located at 10 combinations of depth and position relative to the dripper Our results showed large sensor-to-sensor differences, even when installed at equivalent depth and coordinates relative to the drippers. In contrast, differences among virtual sensors simulated using a HYDRUS-3D model at those soil locations were one order of magnitude smaller. Our results highlight, as a possible cause for the sensor-to-sensor differences in the measurements by capacitance sensors, the natural variability in size, shape, and centering of the wet area below the drippers, combined with the sharply defined variation in water content at the soil scale perceived by the sensors.