You're absolutely right - I explained my reasoning poorly. Let me try again: a README.md marks a conceptual project root. It's a way of flagging to developers: "The code in this directory builds, deploys and/or runs separately to other code in this repo." It's a marker that says you need to think of this directory as something that could meaningfully be split out into a separate repo or storage, but isn't because it only makes sense in the context of this repo. It's common in public repos with docs and examples dirs in the project root. The docs are built separately. The examples are meant to be standalone and could be implemented that way even if they actually import code from the parent repo instead of requiring it as a third party dependency.

> [A README.md is] a way of flagging to developers: "The code in this directory builds, deploys and/or runs separately to other code in this repo."

I disagree, that's merely correlated to the real purpose: A file-level README is something an author adds when they anticipates something about the mental-state of future readers. In particular, that a reader won't arrive already-prepared to understand or navigate.

While that often happens at "project roots", it is by no means exclusive to them, and it can still happen in sections with extremely tight dependencies or coupling that could never exist independently.

Analogy: While many roads begin with a speed-limit sign, it is not true that every speed-limit sign indicates you've entered a new road.