That makes some sense, but even given that, there are still problems.
#1: The documentation (the little help box in tool->Options) says, or maybe implies strongly, that it does work recursively in the tree - not just in the workspace.
Also in the help file: Recursive contains matching - When selected, lists files from configured match groups (workspace, open files, history, current file directory) which contain the wildcard specified anywhere in the string. For example, "m*.c" will match a file called "main.cpp".
#2: When a recursive option is picked, it matches all files in the workspace, not just from the selected location in the tree and below.
So, if I select C:\src\foo\bar and enter the pattern "*.blat"
It shows all files in the workspace matching *.blat, not just those under C:\src\foo\bar.
The files in C:\src\foo\bar aren't even listed first - simply alphabetical.
"recursive" seems to mean "All files in the workspace"
"current directory" means just that.
#3: In Tools->Options The "*" in the file name patterns is screwed up by the "*" prefix that marks settings that have changed, but not yet applied.
See the attached images - notice it says "...style (File .cpp)" -- missing the *.