I really don't get it - razing a settlement should be the least attractive option (unless you are the Huns) but I regularly see the AI do it for no apparent reason. For example, the Franks declared war on my WRE and proceeded to fight a bloody battle for Camulodenum, then razed it.
What is the AI thinking here? If they don't intend to hold it surely it's better to sack the settlement than to raze it, as then it's basically spent - they can't easily re-found it and they can't sack it again.
The Huns are obviously a special case as CR has coded them to be a game mechanic rather than a faction that should have rational goals.
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