Honestly it makes perfect sense. Maybe it's hard to explain properly without writing a full blown essay but i'll try. Apologies if any of this sounds condescending, it's not meant to it's just that if you don't think it makes sense i'm trying to break it down so it does.
It sounds like you're coming to it with the view that every single player we have on the books, from under 12 to under 23 is viewed by the coaching staff as a potential first teamer. That's your first mistake. They aren't. At all. Obviously you will always get the odd bolter but in the main, the coach of the under 18s will know on day one of the season who is and isn't likely to be given an extended contract at the end of the year. So take right back as an example. Let's say next seaon, hypothetically, Kenny is our first team right back, and we want to put Kyle John out on loan. We have a couple of options then on what to do at right back in the under 23s. We can move a centre half from the under 23s to play there (and people on here will say 'typical Unsworth moving people out of position') we can keep John (and people will say 'typical Unsworth more bothered about winning games John should be out on loan so he can develop) or we can bring in the under 18 right back. Now it's possible that the under 18 right back is a 5ft 2 weakling who the under 18s coaches rate as the least likely player in the set up to make it, and was pencilled in to be released. Maybe the coaches think the right winger in front of him and the right sided centre half next to him will see their performances suffer massively if he steps up, and their development will be stunted because they're constantly covering for him. Is that a good way to develop your players? I would say no. So the other possibility is that Unsworth says we have a bit of a problem at right back I want to bring someone in, and the club say yeah no worries but they have to be free and on under £3k a week because we're perfectly happy that Kenny and John will sort us at right back for the next 10 years. He then goes and gets a lad who's being hawked round by his agent after being released by FC Koln or whoever, specifically to fill a gap in the under 23 squad. If he turns out to be great then obviously they'll be made up and he'll progress, but that isn't why they're buying him.
That's just one hypothetical scenario. There are loads of other reasons for it to happen too. Player development is a pretty complicated process, it's really not just as simple as is being made out.