Seems there's a bug in the dwg reference attachment properties dialog box in CE 10.16.00.080:
1 - There's no "coincident world" option listed.
2 - Hitting Ok will attach the dwg as "coincident world"
So there seems to be 2 issues with that dialog:
1 - "Coincident world" shown as "Coincident"
2 - "Coincident" option is missing
Attaching using non-interactive options seems to works as expected:
If this is a known defect, if I can get a defect number, that would be much appreciated.