The AI is not very good at dealing with large encirclements, period. If, for example, you take an entire tank army and use them to close up a large pocket 7-8 provinces across, the AI will be way too slow to notice that it needs to do something about it - by the time it starts moving (a few of) its troops out of harm's way, it's far too late. A few divisions may escape the final closure but you can capture a good 20-25 divisions at a time in this way (ymmv depending on front density etc).