One issue I can spot is that the localites group ends too early. If you'd like the name of that group to be used for the entire location you're capturing, then you need the group to enclose all questions related to that location. I haven't carefully looked at the observation groups but I wonder whether you might have something similar going on there -- you'll want to make sure that the obs group contains everything about a single observation.
It's certainly possible there's a bug with complex nesting but I hope that what I've described above can fix it! We should consider updating documentation to make it clear that for a group's label to be used for repeat instances the group needs to begin right after the repeat begins and end right before the repeat ends.