It does reflect, you just have to look closer at the details. By default, the textual order in the cfg doesn't change any positions, just the layer numbers in each entry affected:
[Area.015]
Title=Japan1941
Local=..\CFS2_Scenery\~ASIAN-PACIFIC\Japan1941
Remote=
Active=FALSE
Required=FALSE
Layer=15
Unfortunately, this system can leave your cfg in a mess over time that may be perfectly readable to the sim engine, but very offensive to the eye. I use the attached application below to resort my hierarchy after every cfg change. It's designed specifically with FS2002 in mind, but works in every MSFS that uses a scenery.cfg file AFAIK, the exception being CFS3. Just drop it into your main CFS2 folder and make a desktop shortcut for it. After a major cfg mod, just double click the shorty and it'll auto-sort the cfg for a correct visual layout.
Remove the txt extension to make it an exe file....