OK, so this makes more sense if you use the new folder organization. Go to File > Library > Organize Library… and you get this:
View attachment 193387
The second option is grayed out for me, cuz I already did it, but what it does is reorganize your iTunes Music folder like so:
View attachment 193389
Admittedly, the iTunes Music folder’s name now doesn’t make any sense, and it should be iTunes Content or iTunes Media or something, but whatever.
If you do this, be prepared for Time Machine to need to re-copy EVERYTHING. But I can afford to lose my oldest backups, so I did it.