Subdirectory Behavior: Expand not working

[Buckaroo Banzai]

I might be misunderstanding what this option does.

I had hoped that setting it to "Expand" would mean that when I drag a folder onto the Playlist in VLC, it would add all the media files contained within that folder (hopefully recursively) into the playlist, rather than just the single folder itself which I then have to double click to expand.

I'm on macos, Apple Silicon.

Am I just misunderstanding what that setting is supposed to do? Or could this be a bug?