/home/root directory again contains another /home/root dir in raspberrypi rootfs. The actual home directory contents of root user available under /home/root/home/root directory.
base-files bbappend in RPI dynamic layer has a RPI specific do_install() append where mmc block partition 1 & 2 are mounting under /boot and /home/root directories respectively.
We've a trace in morty branch which is continuing now in master branch under dynamic-layer that causing this issue in latest RPI builds.