like people have said, delete hole can be a little buggy. when i tried it out yesterday before posting, and again just now, i found that if it is audio tracks it seems to work fine, as expected, you delete the section with delete hole checked, it is deleted and the later parts slide over, but if it is midi data alone (
as it seems is your case), or a selection of audio and midi data, the tracks with midi data will just delete the selection but leave the hole as you are experiencing, the audio tracks however will (
should) work as expected. you can fix this easily enough by manual means and a little extra effort, although you shouldn't have to