Mine is like this too. This is because the area the cheilitis is in is actually missing layers of skin. It's like a shallow trench dug out of a hill/mound. This type of cheilitis has to be healed layer by layer. I am experiencing reepithelialization from outside edges and the bottom center (because that is low point in the lips) The outside boundarys are slowly healing and making progress inward as the new layers of skin build the lips back up.
The cheilitis area after a "bad" peel does not look sunken in because its ballooned up with inflammation and rawness. A "good" peel will not be raw and will have a fresh new layer of protective skin underneath to keep building upon.