I hope you found a solution; if not here's the meat:
I am using Moodle 3.6
- The option appears when you click "Download All Submissions"
- At the end of the list of students, there is an Options section as shown.
- Simply deselect the option to download in folders.
I agree it is annoying when each participant is submitting only one file...even more frustrating when you have worked out a strategy for correcting group work and returning feedback files as a group!