Since vRealize Log Insight 4.5 the agent has recursive directory support, however there is a requirement for them to be at least 2 levels deep
If you attempt to configure a log directory less than 2 levels deep using a wildcard it will be accepted on the Log Insight Agent config UI however on the end point you will receive the following error within the LIAgent log directory. (C:\ProgramData\VMware\Log Insight Agent\Logs)
2019-02-07 11:01:59.592025 0x000026e4 <error> FLogCollectorEx:452| Failed to initialize channel [filelog|com.microsoft.iis.IISWildcard] because of improper configuration. DirectoryMonitorEx::CheckBasePathEligible(): The base path should be at least 2 level(s) deep: [D:\Logfiles].Unfortunately at this time there is no work around.