The inner field is inside the outer field's area, but the Exclude option for the inner field does not work.
One possible reason for this is that the inner field's area has some space between its border and the outer field's border. Due to this, the inner field's region is not "excluded" from the outer field's area.
In this example, the areas overlap but there is a space between the borders:
The Exclude option does not work for the inner field's region:
One can inflate the inner field's area so it overlaps with the outer field's border on the left and/or right sides.
In this example, the areas overlap but the inner border overlaps the outer border on the left side:
The Exclude option now works and excludes the inner field's area: