I recently upgraded to pytest 4.0.2 (from 3.6.4) and am now seeing some changed behavior.

My top-level conftest.py would, under certain conditions, add a package name to the collect_ignore list.
This package also had a conftest.py, but with 3.6.4 the package's conftest would be ignored when the package was ignored.
Now with 4.0.2, the appropriate tests are ignored, but the conftest.py is no longer ignored.

I've attached a simple example to illustrate the behavior.
I'm running Python 2.7.6 (yes, I know, not by choice) on Windows 7.

pytestbug.zip