See images in attachment.

Public folders underneath private spaces inherit sharing permissions from the private space.

I've shared the space with Teams ONLY, no individual users.

Yet, the sharing modal currently works to actually inherit the individual users that are part of those teams to also be shown as individual people within the sharing modal as well.

Feedback from the support team added below:

Why individual users appear in the sharing modal

This is currently how the sharing modal behaves for public locations. Even though those users are members of a Team that's been added, the modal renders them as individual entries rather than grouping them under their Team. It's a UX limitation, not a sign that someone manually shared with those users individually. When you switch a location (Folder) to private, the modal shows the cleaner Team-grouped view you're expecting.

Your assumption about inheritance

You're correct. Public locations under a private Space inherit the same access as the Space. So if your Space is private and shared with specific Teams, the public Folders, Lists, and tasks within it are accessible to those same Teams. No additional permission changes are needed for that setup.

Getting to clean Team-only sharing

For the cleanest view, the key is to set your locations to private and share them explicitly with your Teams. That way, the sharing modal will reflect exactly what you expect: Teams only, no individual user clutter. Just be aware that if anyone has been individually shared at any level (Folder, List, or task), that override will persist even after you restructure, so it's worth spot-checking a few locations after making changes.

If you'd like to see improvements to how the sharing modal displays access for public locations, feel free to post your feedback at https://clickup.canny.io/feature-requests so our product team can track it.