This has always been a point of debate about the requirements. Actually, very few dives in the PADI AOW require that the instructor physically be in the water and in direct control. The deep dive is one of them.
I actually had a friend take the AOW and the instructor only went in the water on the deep dive. 1 dive of all five. Plus, he couldn't function with a compass. After 20 years of living behind a compass in the military, I don't expect that level of expertise from everybody, but he didn't know how to handle a class and instruct when they had both direct and indirect compasses.
Look, this was an exceptionally bad case of someone who was teaching for $$ and the free trips to San Carlos to do the instruction.
But consider what the instructor is saying and teaching. You'll know if you're getting good instruction that makes you a more informed and trained diver. And if you're with a competent DM in the water, you'll get some first hand feed back on how/what you did. Personally, I always spent direct time with the students during at least one leg of each dive. If there were too many students for me to get decent time with everyone, I tried to split the dives.
If you don't have a DM or instructor with you, how do you know whether you're holding a compass right, turning correctly, etc.? Or for the Search & Recovery dive, that they are laying out the line correctly? A DM, AI, or instructor are all fine for supervision, but how do you evaluate whether the student has successfully completed the required tasks when there is no supervision in the water with them? I haven't been able to answer that one yet.
By the way, I took that friend out after she got her card and went through the skills with her to ensure that she understood what she was supposed to be doing.