This is Working as Designed. The alphabetical groups are split with (Cont) whenever a column has grown to the maximum length, and this occurs within the boundaries of the alphabetical group (very common). It can happen with columns 5 long and groups 2 long almost as easily as 200 long with groups 50 long.
The category columns are designed to spread the entries as equally as possible across 3 columns, with the third column receiving a lower amount when there is a remainder. If the two entries from H are moved to column 1, then the entries are not spread evenly. In the category in question there are 16 entries. For an even distribution of entries across 3 columns, 16 / 3 ~ 6 entries per column. According to the algorithm, there is NOT enough space in column 1, because it already contains 6 entries. If two entries were taken from column 2 and put in column 1, then we have a distribution of 8, 6, 2, which is uneven and visually unappealing. The correct distribution is 6, 6, 4, which is used by your category.
This is the same column-splitting algorithm that was used by VaultWiki 3, although in VaultWiki 3 the minimum entries to create columns was different -- since there are 16 entries in this category, this category would not have columns yet under VaultWiki 3. However, if you had a category in VaultWiki 3 that had at least 28 entries (instead of VW4's 13), you would have witnessed the same behavior. VaultWiki 4 lowered the threshold for columns in order to reduce the amount of scrolling needed in small categories.