That's a flexible sub-assembly. When you insert assemblies into an assembly it (by default) treats it as a rigid group, to save on mate rebuild times. You can make it flexible though, and then it will calculate all the mates within that sub-assembly even at the higher assembly level.
That means a flexible assembly. Basically what this allows you to do is mate a component
from a subassembly at the upper level assembly level. I have run into this when my company
wants a component at a sub assembly level for inventory reasons, but is does not get installed
until the final assembly level.