Why do my territory assignment rules work differently when using the excludes criteria

When using excludes in the criteria of a territory assignment rules the rules behave differently when running from the parent territory or directly on the territory. When the territory rules are run at the model level/parent (same with account update) we use workflow evaluation criteria for evaluation vs when run from territory directly we just evaluate the rules using AND condition of all rules defined (No workflow evaluation criteria here). 

Example: If the multi_picklist__c field on account has the values: A, B, C and the rule criteria says multi_picklist__c EXCLUDES A,B,C then the account is not associated.
If the field has A or A, B that is if the field excludes any one of the listed values the rule applies and the territory is assigned.