The problem that myself, and potentially some others here are having, is specifically the fact that that block being filled means there is a read-only file somewhere within the target folder,
That is not correct. If you look carefully, you will see that the box is always a solid block even if there are zero files marked read-only within the folder.
It is, in fact, not an indicator at all. Microsoft should never have used a checkbox for a command. And that's all it is, a command. When you click it clear, you're telling Windows that you want to unset read-only from any files that may be read-only within the folder and its subfolders. When you check the box, you're telling Windows you want to set all files within the folder and its subfolders to read-only. Whether you set or unset, it only affects files. The read-only state of the folder, and any of its subfolders, is not affected. Only files are affected.
So, the item labeled "Read-only (Only applies to files in the folder)" does not indicate anything. However, to your point, it may be used to provide relief (possibly temporary) from a problem (TBD) that is setting one or more files within your folder to read-only. The problem with this bad interface design is that it is misleading people into believing that Windows "keeps resetting my folder to read-only". And that certainly distracts from finding the root cause of whatever problem they're having.
No doubt something is setting one or more files to read-only for some users and I will go back and edit my replies to be considerate of the fact that the use of this command to remove the read-only attribute from files could be helpful, but more investigation is needed to identify which files are being set read-only, when that occurs, and what processes are involved.