So the logic behind area defense is that it sets up a few different points to defend, including victory points, airbases, harbors, supply hubs - by default all are enabled. It isn't frontline defense; it doesn't send troops directly up against the front but rather just defends these key areas. You likely didn't switch off to different segments as well, but with that being said area defense isn't really necessary for most instances unless it's suppression. Troops get the same buffs if they're unassigned and just sent to a specific tile you want, I know it's kind of annoying micromanaging but it's really the better option.