I was where the Initial Position says. Gilden was alive (and I had peace treaty with him) and I was trying to face the Kraxis armies.

The next turn Gilden finally falls. As I try to move onto the nearest Kraxis army, Markinn appears to tell me that I'm not welcome in his lands and asks me to leave. To which I can choose between declaring war or leaving. I was so confused that just clicked that I'd leave his lands... and therefore the initial pic.

Not sure what would have happened if I had declared war to a dead faction as if I load the game just before moving that army, the "bug" that updates the ZOC makes it Kraxian land.