Ive had it happen to me a few times, once had 11 of my 19 player squad selected, but it was 4 seasons back, and I didn't think it that impressive, was sure someone would have had more than a whole team picked.
Anyway, in these situations, the computer generates the amount of youth players you are short, they are generally pretty average youth players, around the mark of the players you have on offer just before you start your first season. I've grown to really like my players buggering off, as I always find one or two of my younger players really shine in their absence.