I'm going to explain this simple as I can cause this been messing with me a lot and been trying to find a solution but nothing works for me and instead of explain all details also add a video on how I made this
https://streamable.com/vnfxk (Ignore the audio was listening to a video that got auto played)
the inner edges of the cage gets stuck on the mesh deform object vertex cause I did experiment a little and found out when vertex from the mesh deform object touches the inner edges of the cage it doesn't deform with the cage anymore and acts like normal without deforming and if anyone answer this question that has been killing me very much I appreciate it a lot and if you want to use the save file
https://gofile.io/?c=dcjxpR (File is fffffffff.blend)
thanks for your time.