In flat layouts like the one on GitHub, I find this sort of folding useful as it saves some clicking.

In tree layouts, I am not a great fan of this folding of directories, mainly because it distorts the visual depth of an account in the hierarchy. In Fava, the folding would also be complicated by the fact that intermediate accounts might also have transactions, so the folding would be somewhat inconsistent.

I think that this folding can already be achieved by just naming the accounts appropriately (Assets:AmazonPoints instead of Assets:Amazon:Points for example).

In Fava, the folding would also be complicated by the fact that intermediate accounts might also have transactions, so the folding would be somewhat inconsistent.

When there are transactions on the intermediate accounts, or at least when there is non-zero balance in the intermediate accounts, they shouldn't be folded. I don't think it's very inconsistent, as far as you can see that the intermediate account has different balance than the leaf one.

I think that this folding can already be achieved by just naming the accounts appropriately (Assets:AmazonPoints instead of Assets:Amazon:Points for example).

It's true, but there is value not to do that. For example, you may want the level of merchant to always exist for accounting consistency or future extension. The intermediate account may also contain closed leaf account that you no longer care about.

The problem I'd like to solve is that when you use this kind of convention for account name, the account table becomes very long and low in information density. I think it would be good to at least allow user to choose (as an option) whether to do so.