[BUG] CLAUDE.md in subfolders not really dealt with?

Environment

irrelevant

Bug Description

CLAUDE.md files in subfolders are not respected at all.

Expected Behavior

From the documentation:

Claude will also discover CLAUDE.md nested in subtrees under your current working directory. Instead of loading them at launch, they are only included when Claude reads files in those subtrees.

Actual Behavior

CLAUDE.md and CLAUDE.local.md files are completely ignored - even when actively instructing to read or write files to/from these subfolders.

Even CC knows...

Looking through my system prompt, I don't see any specific instructions about CLAUDE.md files in

subfolders or about including them when reading/writing files in those directories.

The only CLAUDE.md files mentioned in my instructions are: - The global one in ~/.claude/ - The ones at project root levels

There's no mention of: - Checking for CLAUDE.md in subfolders - Including subfolder CLAUDE.md content when working in those directories - Any cascading or inheritance behavior for subdirectory CLAUDE.md files

So based on my instructions, I only have access to and follow the CLAUDE.md files that are explicitly

shown to me in the system prompt, not any that might exist in subfolders.

Additional Context

https://docs.anthropic.com/en/docs/claude-code/memory

Can we get some clarification about that or have it removed from the documentation if it's not meant to be working anyways?