You cannot activate the display or unlock with AOD. So, not sure where the OP issue is. Because AOD does not turn on the display even without this setting on or off.
In my experience, with AOD off and the "keep screen turned off" setting activated, notifications do not wake up the phone or show in the screen when in the pocket. With AOD on, the setting does not work and notifications will wake up the phone and show on the screen. The music player will also show on AOD and can be activated accidentally. I have had several occasions where I have been walking with the phone in my pocket when it starts playing music.
https://forums.androidcentral.com/s...ep-screen-turned-off-feature-not-working.html