What is your testing mode? I get varied results depending on how I am testing...
The browser, browser mode ("standard" or "responsive") and Hype's "Reflect" app.
For instance, using your exact elements - but changing their properties - both Chrome's responsive mode and Hype's Reflect app appear to perform inaccurately...
I turn off all flexible options for all elements (removed the bottom & right pins of your small individual rectangles). The two Groups never had flexible settings to start. I also turned off the "Scale" settings on the Layout Inspector.
Then I deleted the "568 & up" layout.
At this point nothing in the Hype project should be responsive at all... yet when I use Chrome in responsive mode and Hype Reflect in responsive mode all the rectangles expand to fill the width of the screen.
This should not be happening. Safari in responsive mode shows things correctly, nothing expands, all elements remain static in size.
When testing in Safari, Chrome in a normal web browsing window everything works as expected - i.e. nothing is responsive.
Using Safari & Chrome in "standard" mode with your original set-up yields the same results in my tests - no flexible response - with or without the second layout in place. Your individual squares are pinned on all sides but your Groups have no flexible settings.