I now know what the confusion is, the 1-4-7-10 thing was only the inaugural season. After that it's based solely on recoreds. Worst four teams in the east, best four in the west.
from the rules:
2) Divisional assignments will change each season. The format is this: a) initial divisional assignments will be follow the general 1-4-7-10 East, 2-5-8-11
3) Cumulative team records from the prior season will determine the divisional assignments for Season 1 each year.
3a) Season two divisions will be based on order of finish from season 1 with the 4 playoff teams comprising the west divion.
No mention of 1-4-7-10 for future seasons.