Na, it makes perfect sense, especially if the person isn't socially retarded or unfit for management. They're able to contribute meaningfully to broad architectural designs to have a larger impact then hacking away at a single project, which also imparts their thought process to a larger group of developers who may end up in his shoes one day. Ideally someone in his shoes can recognize top talent and ideas as well, and clear organization barriers away for individuals and groups to achieve large things as well. Besides, people with his ability and experience should know everything that is going on to influence what the company chooses to do with its money and time over a political bonehead.

He was already in a leadership role (he led Google Brain). Now he's just in a bigger leadership role.

I am sure all the people he will be leading are passionate, he may not have to deal with the run of the mill org issues. Being promoted gives him more influence/power to implement his vision.

BTW, he is Jeff Dean, he can be the AI chief and hands on technical at the same time :) May be they promoted him because he was bored at work.

They promoted him because they already have AGI and it was bored at work.

Jeff Dean is Google's AGI

Gives him something to do while his code complies.

This is a myth spread by people who can not code.