I've noticed similar odd behaviour in my Soviet game. I've switched on AI control at Army Group Level (what I call a Soviet Front) but I've noticed all sorts of weird deployments of Divisions relaitve to Corps, and Corps relative to armies. There seems to be a general trend to spread deployments over a ridiculously wide area, so Coprs and Armies overlap even though in many cases this places Divisions outside communications range of their HQ's. I tried to regulate this by placing more objective markers down for each Front to clarify exactly which provinces they were meant to be defending, but they seem obsessed with defending other areas that are clearly not their responsibility.
I've more or less decided that I can't trust the AI when it comes to unit deployment. It's not a problem when your not at war, but I can't let it do things like that during combat.