I have an entity "Pictures" that contains multiple Image Fields and one lookup field that points to an entity "Model". In the CDS entity "Model" I have setup ALL 6 Default Field Groups to expose the "Name" Field and the "Description" Field (in that order) from the "Model" entity. Creating an App from the "Pictures" entity Data Source, I was expecting to see Names and Descriptions in the "Lookup Drop Down" control associated to the Lookup Field in the Edit Form that was created automatically. There are multiple things that seem broken: The DataCard that is created and contains the "Lookup Drop Down" control has a "DisplayName" Value that is the same as the "DataField" Value, which is the "Lookup Field Name". Normally, the "DisplayName" Value should be the "Lookup Field DispalyName" and the "DataField" Value should be the "Lookup Field Name". This first bug doesn't break functionality though, we just get a label that shows a field name rather than its display name.
Then, clicking on the dropdown, I always get the PrimaryId field and the Name field of the Model entity, which means that the Field Groups are totally ignored, and there is no way to show the information in the order I want, besides manually programming the lookup by accessing the Model as a datasource.
Have you had better luck with Field Groups in CDS and automatic apps creation?