Support hierarchical .claude config discovery in monorepos

Problem

In monorepo setups with multiple apps, each app may have its own .claude/ directory with app-specific skills, hooks, settings, and MCP servers:

<root>
├── .claude/
├── apps/
│   ├── app-frontend-monorepo/
│   │   └── .claude/       # frontend-specific config
│   └── app-backend-monorepo/
│       └── .claude/       # backend-specific config

When Claude Code is launched from the root, it only discovers the root .claude/ config. If the agent starts working on files in app-frontend-monorepo/, it does not pick up that app's .claude/ hooks, settings, or MCP servers.

Current behavior

• Skills: Auto-discovered from nested .claude/skills/ directories ✅
• CLAUDE.md: Loaded on-demand from subdirectories ✅
• Settings (settings.json): Only from repo root ❌
• Hooks: Only from repo root ❌
• MCP servers: Session-global, not per-app ❌
• Permissions: Session-global ❌

Desired behavior

When Claude Code is working on files within a subdirectory that has its own .claude/ directory, it should merge or override the root configuration with the subdirectory's config — similar to how skills and CLAUDE.md already work.

This would mean:

• Hooks defined in apps/app-frontend-monorepo/.claude/settings.json activate when working in that directory
• MCP servers scoped to a subdirectory's .claude/ are available when working there
• Settings can be layered: root provides defaults, subdirectory overrides

Use case

This is essential for monorepos where each app has different:

• Linting/formatting hooks
• Dev servers and MCP integrations
• Permission requirements
• Testing workflows

Current workarounds

• Custom subagents per app (partial — no hook/MCP scoping)
• Path-specific rules (guidance only, not enforcement)
• Running separate Claude Code sessions per subdirectory (loses monorepo context)

Proposal

Extend the existing scope resolution to support directory-level config discovery, merging configs up the tree (similar to .eslintrc or tsconfig.json resolution):

root/.claude/settings.json          → base config
apps/app-frontend/.claude/settings.json → overrides when working in apps/app-frontend/

This would make Claude Code a first-class citizen in monorepo workflows.