It has to do with your subject contrast and background contrast. In some cases subject contrast is strong enough so that AFC works, in other cases it does what you describe (if subject and background contrast are too close together). And with the GH2 I've seen it "pump" back and forth between subject and background, so I gave up on it with the GH2.
I haven't been able to run serious testing with the GH3 but it does look like it works better. I found with the GH2 that using "face detect" (on one of the dials on top) was actually more reliable than AFC. Again I haven't had the time or chance to test this with the GH3.
I used it some more tonight, and it behaved better. I would think that if the entire frame is out of focus, though, it should at least try to adjust! But again, it worked better tonight.
