Is there any way to only display only one of the "For This Site" or "For All Sites" folders in situations where Episerver is set up with only one site?
My first idea, removing Read permissions from each, seems to break all content (no error message, but the blocks/media navigation pane is empty and creating a new block will fail silently). Other combinations or removing permissions also failed.
The behaviour you describe is the default behaviour when there is only one site set up so you should only see the "For all sites" folder. Do you have more than one site configured in admin mode? If you do only have one site ensure that "Use site-specific assets" is unticked in the site config in admin mode.
That was it, I had "Use site-specific assets" ticked (Facepalms)