Nesting convention preserved or removed in Rails 7?

rubyonrails-docs
1

This documentation suggests that one can/should still do this in Rails 7: 

module Foo
  class Bar
    Wadus
  end
end

However, Rails 7 does not seem to accept this. I have a subdirectory of models/foo containing a file bar.rb, and the above was the convention for Rails 6 and lower. The outer “module” referred to the subfolder of models and “Bar” aligned with the file name. (Correct me if I am wrong to call it a “convention” … as pertaining to “convention over configuration”

So, question:

Has that “convention” been removed? What is the definitive replacement then?

If it has been removed, the above doc is wrong?

Hoping to get some clarification. thanks.