I'm aware of that. It's still a division. The NFL, for example, is divided up into 8 divisions, before going into a knockout system. No idea why the teams were put into the original groups before qualifying for the current stage, though. Doesn't seem to be geographical or based upon any sort of league position.
They have a similar system for the MLS, though it's only East and West. Not a good idea, in my opinion.
If MLS had a real league system, it would encourage the buildup of smaller teams, make the league more competitive, (spreading its prominence) and make to more marketable to the world outside of USA