When a User attempts to invite users when switched into the Top Level Organizational Unit (TLOU/Root FlexOrg) and selects a FlexOrg lower than the TLOU in the Organization dropdown they will be presented with the list of User groups at the TLOU instead of the list of User groups at the lower FlexOrg they selected.

For example if I invite a User to Sub Org 22, I find the Usergroups presented in the Usergroup dropdown match those configured within the Top Level Org - CMBU-TMM rather than "Org22" 

CMBU-TMM - Usergroups:



Org 22 - Usergroups:

This is expected behaviour the Usergroup dropdown is populated based on the FlexOrg/Organization the user is currently switched into. To add a User to a Usergroup that sits within the target FlexOrg/Organization you are attempting to invite the user to please first switch into the Organization before performing the invite.