Yes, it is misleading.  The following are exerpts from php.ini-dist which explains it pretty well.  Note that the '2' in the docs refers to the 'N' in php.ini.  Also note that the parameter separator is a semi-colon (;) for all OS's and since ; is also for comments in php.ini, one must quote the string when N is used.

[snip]

; Argument passed to save_handler.  In the case of files, this is the path
; where data files are stored. Note: Windows users have to change this 
; variable in order to use PHP's session functions.
;
; As of PHP 4.0.1, you can define the path as:
;
;     session.save_path = "N;/path"
;
; where N is an integer.  Instead of storing all the session files in 
; /path, what this will do is use subdirectories N-levels deep, and 
; store the session data in those directories.  This is useful if you 
; or your OS have problems with lots of files in one directory, and is 
; a more efficient layout for servers that handle lots of sessions.
;
; NOTE 1: PHP will not create this directory structure automatically.
;         You can use the script in the ext/session dir for that purpose.
; NOTE 2: See the section on garbage collection below if you choose to
;         use subdirectories for session storage
;
; The file storage module creates files using mode 600 by default.
; You can change that by using
; 
;     session.save_path = "N;MODE;/path"
;
; where MODE is the octal representation of the mode. Note that this
; does not overwrite the process's umask.
session.save_path = "/tmp"

[snip]

; After this number of seconds, stored data will be seen as 'garbage' and
; cleaned up by the garbage collection process.
session.gc_maxlifetime = 1440

; NOTE: If you are using the subdirectory option for storing session files
;       (see session.save_path above), then garbage collection does *not*
;       happen automatically.  You will need to do your own garbage 
;       collection through a shell script, cron entry, or some other method. 
;       For example, the following script would is the equivalent of
;       setting session.gc_maxlifetime to 1440 (1440 seconds = 24 minutes):
;          cd /path/to/sessions; find -cmin +24 | xargs rm

; PHP 4.2 and less have an undocumented feature/bug that allows you to
; to initialize a session variable in the global scope, albeit register_globals
; is disabled.  PHP 4.3 and later will warn you, if this feature is used.
; You can disable the feature and the warning seperately. At this time,
; the warning is only displayed, if bug_compat_42 is enabled.

session.bug_compat_42 = 1
session.bug_compat_warn = 1

But according to what you quoted:
[
; NOTE: If you are using the subdirectory option for storing session
files
;       (see session.save_path above), then garbage collection does
*not*
;       happen automatically.  
]

The note doesn't seem to make any qualification with respect to the level, N.  Taken at face value that note says that, unconditionally, if you use the N;/path form, automatic garbage collection will not take place.

At the moment I'm most concerned with clarifying what happens in the more basic situation when only a path is specified.  In that case, automatic garbage collection occurs normally regardless of the path depth?

Thanks

This is now documented and will show up during the next manual build, thanks for the report :)

http://cvs.php.net/cvs.php/phpdoc/en/reference/session/ini.xml