It's Oakland because of the "record vs. common opponent" tiebreaker. The Raiders were 2-12 and the Chiefs 3-11 vs. common opponents* Therefore the Raiders officially finish 4th in the AFCW.
* not to be confused with the opponent winning percentage thing used to determine draft order among teams with identical records. That's different and considers all 16 opponents, not just common opponents.
After the NFL realigned in 2002, they went to a slightly different playoff/standings tiebreaker system. Common games is now the 3rd tiebreaker ahead of conference record.
Tiebreaker rules for two teams in the same division:
1. Head-to-head (best won-lost-tied percentage in games between the clubs). Oak and KC split
2. Best won-lost-tied percentage in games played within the division. Oak and KC same
3. Best won-lost-tied percentage in common games. KC had better percentage than Oak. Tie Broken
4. Best won-lost-tied percentage in games played within the conference.
5. Strength of victory.
6. Strength of schedule.
7. Best combined ranking among conference teams in points scored and points allowed.
8. Best combined ranking among all teams in points scored and points allowed.
9. Best net points in common games.
10. Best net points in all games.
11. Best net touchdowns in all games.
http://www.sportsline.com/nfl/standings/playoffrace/tiebreakers-explanation