In this Go game why does the territory appear as being completely captured
A corner invasion can in some cases can make a huge difference. In this case the play on th 3-3 point threatens to cut the white group in the upper left into three pieces, two of which have no chance at life and the third is in bad shape.
That siad, I think the AI is a bit premature in declaring all these stones dead.  A play by white to connect  at the 4-3 point or to undercut at the 3-2 point could lead to life for at least the largest part of the white group, depending on the further line of play by both players. I am not an expert (I was about 10 Kyu at my best, years ago), but I would not concede with the white position after this move,
I agree with the comment that a larger board size may avoids tactical oddities with this AI.
Addition: A comment by @ilkkachu points out that in the 2nd image it is black's turn, not white's, Given that, white doesn't seem to have much chance. If as the comment suggests black extends to the left of the previous store, ther does not seem a plausible line for any white group to form eyes, assuming reasonable play by black. I had incorrectly read the 2nd image as white to play, that makes a sizable difference.