This is functionality by design.  Module settings have a few more "rights" associated with them that you may not want a "non-admin" to be able to hit such as "copy to all pages" or "change container", etc.  The "Edit" module security rights means that you want them to edit only the content of the module but not really touch anything else as far as page structure (which, of course, includes several parts to do with a Module Settings).

A work around is to create a separate "Edit" control for your module where those settings can be handled instead of directly as a "Settings" control.  This will allow you to extend those rights to somebody with Edit rights on the module and not have to worry about the truly admin specific settings that are also loaded in on the Settings control.