Before I post this as a bug on the Sourceforge tracker, I wanted to see if anyone has an explanation.
If you have an army that includes paratroopers and air transports, and you select all units and move them to attack a neighboring territory all at the same time, the engine automatically assumes the paratroopers rode the transport instead of walking. Assumes this even without going through the normal dialogue of selecting how many transports to board and which troops to board.
This matters because if AA shoots down the plane, the paratroopers die with it. But if the lazy bums had just walked, they wouldn't have gone down with the plane and could still fight.
This only happens if you move all units at once. If you move the paratroopers and the air transport separately, then the engine doesn't assume to paratroopers boarded the plane.
This gets really weird if your air transports can also have air battles.
1) air transports and paratroopers are in a territory that gets attacked by enemy planes
2) defender sends air transports into the air battle to fight those enemy planes prior to the main battle
3) enemy planes shoot down the air transport
4) paratrooper dies with the air transport, because the engine assumes the paratroopers were on board