When you have a drawing with a lot of XREFs in it, the amount of layers shown in the “Layers” toolbar drop-down can increase dramatically. I started noticing as the amount of layers in the drawing increased, at some point they started being displayed in random order.

This is frustrating! Yes, it is possible to address the problem by purging the drawings to get rid of the extra unnecessary layers, but that didn’t fix the problem in all cases. Then I discovered the MAXSORT variable. It was set to 1000 in my drawing, so I increased it to 2000 and it worked! The layers were instantly sorted in alphabetical order.