Added ad group negatives on an AI Max campaign and the queries kept coming

It's an AI Max behaviour, you haven't misunderstood anything, and this is the single most important thing to know about negatives on those campaigns. On a normal search campaign a query arrives through a keyword, which lives in an ad group, so an ad group negative stops it. On an AI Max campaign the query can arrive with no keyword involved at all - the campaign matched it directly. There is no keyword to block, and the ad group you found the spend in is where it happened to land, not where it came from. So blocking it at ad group level closes one door in a building with several. It re-enters through a sibling ad group in the same campaign, which is precisely the "slightly lower, different ad group" pattern you are describing. Campaign level is the minimum scope that actually works here. Move those negatives up and they will hold. This is why we escalate the level automatically when you add a negative from a term on an AI Max campaign, rather than defaulting to ad group as we do elsewhere. If you added these directly in Google Ads then you would not have had that, which explains how you ended up here. Worth knowing for the same reason: a query on one of these campaigns can have no keyword attached in reporting, so any analysis you do grouped by keyword will quietly omit it. Judge those campaigns on the search terms, not the keyword list.