Here, I made a video. It's not the greatest quality but it shows what I'm talking about. I'm basically stopping the knob at every position and you can hear the fan output change.
You're not making too much of it, or imagining things! I have the same system.
There are 5 major modes identified. 3 of them (vent, floor, defog) push all the air to the selected mode. When the fan is on 3 or 4 it is pushing all that air through smallish openings. The other two major modes are a 50/50 split (vent/floor, floor/defog) and allow the air to exit through two paths, making it sound less loud since it the pressure is reduced.
The detents (detentes?) in between each major mode just give you a little more/less splitting.
Notice a couple of programmed peculiarities, too. When you put it in defog or floor/defog, or the two notches in between, the system will automatically switch from Recirc to Fresh air. If you move it back to any setting outside of those the Recirc selection is not restored.
Also, selecting any of those 4 settings (above) it automatically turns on the AC but does not turn on the AC indicator. This is a choice GM programmed into these types of systems years ago.
I'd like to see a very simple setup kinda like this:
A. One selector for each: Windshield, Floor, Vent (Face); with the ability to set each one independently to either Off, 1/2, Full.
B. One selector for Fresh or Recirc, with light for Recirc.
C. One selector for AC On/Off with indicator light.
D. Fan speed control.
E. Temperature control.
Refer to the design of the radio's volume control with a push button in the middle and volume on the rim for this: The Fresh/Recirc could be in the center of the Fan control, and AC On/Off could be in the center of the Temperature control. (Reduces complexity of layout.)
I imagine it could be laid out with round knob, 3 sliders, round knob
O | | | O
That layout would be symmetrical, very functional, and simple to understand what is on or not. (Currently you have to guess what's on and what's not.) And you would be able to set the air to go anywhere. It's a throw-back to the days of Graphic Equalizers, but it works for me. (Not everyone would appreciate the new design, but not everyone appreciates the current one - me for instance!)