Never mind, finally found the info (MC470135). Not 100% clear as to why this is happening, they state "...until Windows Autopatch introduces full support for Windows feature updates." This is supposedly a GA feature, not sure how Feature updates aren't fully supported by Autopatch. Since it says "By Default" I assume I can manually adjust this to a more desirable patch level?
From MC470135:
Summary of changes:
The following new groups will appear but will not affect your tenant. These groups will be used once we release our upcoming Business groups feature in 2023- Group: Windows Autopatch - Test
- Group: Windows Autopatch - Ring1
- Group: Windows Autopatch - Ring2
- Group: Windows Autopatch - Ring3
- Group: Windows Autopatch - Last
The default target version of Windows feature updates policies has been changed to the https://learn.microsoft.com/windows/release-health/release-information?source=recommendations (Windows 10, version 20H2). This helps prevent unexpected OS upgrades on new devices onboarded into the service until Windows Autopatch introduces full support for Windows feature updates. If a device is on a newer version of Windows, there will be no impact to that device. The following policies will be updated by this change:
Modern Workplace DSS Policy Test
Modern Workplace DSS Policy First
Modern Workplace DSS Policy Fast
Modern Workplace DSS Policy Broad