Very odd. Taking a look at your original screenshot, there appear to be two commit buttons: is this on purpose? It doesn't feel like a bug (because we'd be getting reports of it from several clients), but I'd really like you guys to open a support ticket with Squiz Support so that we can take a look at your system though.
This issue has been reported as Bug #2796 (“Create New DIV” frame nests unexpected content in Simple Edit) and will be resolved shortly. A missing leading dot is causing the “Insert DIV” content to be replaced with that of the root page of the domain.
Will a patch be distributed or will we have to request the 3.16.3 SSV again and reinstall?
Depending on how you normally upgrade and your support agreement: your system can be patched by Squiz, or you can be provided with a file/files to fix the issue, or you can be upgraded to the latest version with the fix.