For what it's worth, I went ahead and used the feedback app to send in some feedback about this.
I'm not the only one either I should add, and in one of the feedback entries there was an actual MS Engineer response:
"Thanks for taking the time to share feedback about this - this is currently expected with the change to make File Explorer now immediately update to show live results filtering as you type in the search box, however the team is monitoring feedback in this space and will let you know if there are any changes to share."
So if anyone had any doubts whether it was by design, I guess that confirms it.
Time to send more feedback I guess.