Why are four context sensitive grammar (CSG) rules needed to represent AB -> CD?
With three steps we are not forced to complete all the steps before continuing interacting with other context around the two initial letters.

In fact, Révész himself answers this question, in his Introduction to Formal Languages at archive.org, with the following example.


  Note that three rules like AB → A'B, A'B → A'D, and A'D → CD are 
  not enough to replace the rules AB → CD. For example, if we have the 
  rules S → AB, B → DE, AB → CD in the original grammar, then this 
  replacement makes the derivation 
  
  S ⇒ AB ⇒ A'B ⇒ A'DE ⇒ CDE 
  
  possible, though CDE is not derivable in the original grammar. Such 
  parasitical derivations are often quite difficult to avoid when we are trying 
  to transform a grammar into an equivalent one.