This thing is really buggy. It just arbitrarily won't allow you to put some teams in some slots, no idea why. It's not like you have to constrained by reality - you can put the Kings in the #1 slot, for instance. But start filling out your bracket and, whoops!, you can't put team x in slot y after a while.
It also appears to just be looking at historic matchup numbers (1 seed vs. 8 seed, etc.) so it apparently doesn't take into account team records.
I think it's actually looking at accuscore simulation percentages. The numbers change depending on who is in the slots, so it can't be based on seed.
I tried it yesterday and the #8 seed beat the Lakers the first four times I ran it. Made me happy but it seemed like a possible bug (1/200 chance it happens randomly).
Huh. I thought they were the same with different teams. Tried it again and it looks like you're right. That makes it a bit more useful of a tool, actually.