There are some restrictions. See the footnote at:
https://winscp.net/eng/docs/ui_pref_background#fn1
If none of these explain the behaviour, please post session log file.

It's not doing that either, i.e., transferring 4 files at the same time when I add the base/main folder that contains sub-folders to the destination. As long as all the files in all the sub-folders are downloaded, 4 at a time, without me having to manually add subfolders, I am ok with whatever way it happens.

I mentioned folders specifically because that is the current behavior. I have to create the base/main folder manually in the destination, then add sub-folders manually to the destination base-folder, and that is the only way I can get 4 files to transfer at the same time, one from each sub-folder I add manually.

My question is, given my current configuration, as mentioned in my OP, shouldn't 4 files start downloading simultaneously as soon as I add the base/main folder to the destination? Why is manual intervention needed for transferring 4 files at the same time, and how should I configure WinSCP to make it automatically transfer 4 files at the same time, regardless of sub-folders and their depth levels?

WinSCP would be transferring 4 files at once, not 4 folders. Why should it group the transfers by subfolders?

I am new to WinSCP and to SSH/FTP in general. I have configured WinSCP as follows:

Preferences > Transfer > Background >

• Max Number of transfers at the same time : 4
  
• Enable Queue Processing By Default : Yes
  
• Use Multiple connections for single transfer : Yes
  

What I am expecting is that when I transfer a folder that has many sub-folders, 4 of them would start downloading at the same time. But this is not happening.

In order to make it work, I have to manually create the base folder in the destination, then manually transfer 4 sub-folders, one each, and then 4 of them start downloading at the same time.

I am hoping there is a way to configure WinSCP to do this automatically, that is, when I start transfer of base folder, multiple sub-folders should start transferring.

Any help appreciated.