It looks like the labels just display with overlap.
Whereas with the non-subtype group layer it may only show one label and hide the rest, making it appear cleaner.
The display scale is set correctly because in the sparsely populated areas of the network it conveys the information needed but in crowded areas it just doesn't work as well as it should.

We are currently on 11.3, looking to upgrade to 11.5. I wonder if that adds better labelling support for subtype group layers in webmaps and ExB apps.