Lol, it's ridiculous.
In GameObject menus it executes once, in the hierarchy's context menu it executes for each selected game object. And there is no way to know how this command is called. BRILLIANT.

But what if I'm doing objects grouping? Yeah, I'm getting very interesting objects tree
GameObject.00N...
--GameObject.002
----GameObject.001
------GameObject
--------finally grouped children

And still, this behavior is not specified in the documentation.
What a mess...

private static int gameObjectsCounter;

[MenuItem("GameObject/ProcessObject")]
private static void ProcessGameObject()
{
if (gameObjectsCounter < Selection.gameObjects.Length) {
ProcessGameObject(Selection.gameObjects[gameObjectsCounter]);
gameObjectsCounter++;
return;
}

gameObjectsCounter = 0;
}

It's easy to fix, so why not?

Can this bug be resolved in a way that retains backwards compatibility? For example, additional MenuItem parameters or a new attribute altogether? At the very least, this behavior needs to be documented in https://docs.unity3d.com/ScriptReference/MenuItem.html.

Had this in 2020.3.31, was wondering why my menu item was getting called continuously. Is there any way to check if this is happening? Seems pretty ridiculous that this is left in for backwards compatibility.

wow, thought i was losing my mind, documentation mentions this nowhere, I searched high and low for some reason why i just created hundreds of prefabs from a context menu, and ok so a misfiring bubble event is now a feature, well okey dokey then.... Please document it, the potential runaway madness in editorscripts is scary.

As far as "backwards compatibility" goes, if you successfully avoid the N times N calls to your script, the script will also work if it's called just once like it should be. And more importantly, the same script MUST ALREADY WORK when it gets called once for 20 selected objects (because that's how it works in the GameObject menu - which doesn't exhibit the bugged behavior) as it does when it gets called N times with N selected objects.

Clarification: The script gets called 20 times on 20 objects... not 400 times... but the result is that unless you code around this you will end up processing "400 objects" instead of 20.

This same behavior occurs in Unity 5.6.7f1. The only way to deal with this issue is to code the MenuItem script such that it can detect if it already processed an object before. Calling the MenuItem script 400 times when there is a selection of 20 objects is just broken.

Oh, I didn't see the grey text. I get the backwards-compatability issue, but what are you supposed to do when you need to do something with all selected items only once?..

So, why is this won't fix? How are we supposed to handle different behaviour when selecting something from the Project Hierarchy pane or from main Unity menu?..