Hmm looks like you chose ‘Mixed Set’. Did you try ‘Corner Set’-Terrainset already? I used it with exactly the tileset you posted and it worked with this type as intended. Actually I’m not even sure what the use-case of the mixed version is…
Just found my project and tested it with 1.9.2. Still working:
Nitpick: Terrains and Automap are completely separate features in Tiled.
Your Mixed terrain set seems incorrectly labelled, which may be why it doesn’t work correctly. The various diagonal tiles are labelled with grass edges, but they’re meant to connect to the edge and corner tiles that have dirt edges - this inconsistency will cause incorrect results.
However, as dertom wrote, this is actually a Corner terrain and should not be Mixed.