Bug PSD importer layer groups not working as advertised? Or I am misunderstanding?

https://forum.unity.com/threads/2d-psd-importer-6-0-released-for-unity-2021-2.1187767/
Feature description:

• Added support to collapse the layers in a Photoshop file's Layer Group. This enables a workflow where multiple layers of art in Photoshop can generate a single Sprite in Unity. It’s no longer necessary to merge the layers in Photoshop.

I selected "Use Layer Group" and edited the PSB file by putting 2 layers into a group. But all this does in the hierarchy is just put 2 sprites into an empty object (as pictured)? The bullet point above describes that we don't have to merge layers any more with this feature because groups will generate onto a single sprite?

That's not happening? From what I understand, it's supposed to basically merge all the layers in a group into 1 sprite right? That would be hugely helpful if that's what it actually did.

Tried this on M1 Mac, in most available versions of unity (from the hub) including the latest 2023 Alpha. Is this a bug? Or am I misunderstanding what is supposed to happen?