I've reset the island multiple times and it always has this bug. I know I can easily move the parts and fix it myself but it just makes it feel like this island was really rushed. All the other islands seem to have been put together so well and look so complete but this one really feels off.
Sorry! It was a bug that introduced at the last second and we missed it. We often do a pass to flatten out terrain to better match the structural building grid, so walls sit on top of the terrain rather than inside it. Will fix for next update.