If it was as easy as this. The moment I do it that way, some people will complain that different folders need to be displayed as different albums.
And if I'd mix together tracks of two albums with the same name, what about having two different albums from different artists but which happen to have the same name.
And if I separate albums by artist, what will happen with sampler albums with lots of different artists?

If somebody got the perfect one-size-fits-all solution to this, I'd be very happy to implement it. But I doubt it as tagging is often a mess in the real world.
MediaBox currently uses a mix of tag information and file system information to try to get closest to what the user actually wants.