Answer should "All of the time" The exact syntax is to break out the characters of the userid to be individual characters so a user of "123" would have their files in "/gallery/files/1/2/3" and so on.
Sounds like you've turned that option on. That's used as a workaround for those who's server is running in safe mode, but if your server is not running in safe mode then you should be able to use that tool to store them in the normal manner.