My bet is no one reads the applications.
Most likely they are machine read.if the program reads any thing missing or in the wrong place, it prints out notice with relavant pre-programed wording.
In My case part 10, Q. 16 "Yes" check box was checked.
In your case, I am guessing, you have your children listed
but left the USCIS ''A''- number (if child has one) blank instead of N/A.
Since U.S. born children do not have A numbers, the program assumed they were U.S. born and you got that letter.
Hmmmm. I did fill in the A numbers of both my kids on the N400 applications (self and wife). Anyway, I am planning to take their birth certificates as well as a whole lot of other documents. Better to be over prepared.