A flag with that name exists, yes. But it does not seperate table data into one file per table. It will still put stuff related to the tables into the central ibdata1 file.
Google "ibdata1 one file per table" to see all the pain it causes.
> But it does not seperate table data into one file per table
That's because if you didn't have it set when creating the database, it won't move data to the new fs layout when you set the setting on, without an OPTIMIZE. If you had it on from the beginning, table data is per file. I literally just did an ls on my /va/lib/mysql and there's a folder per database, in which there are 2 files per table (.frm and .ibd).
When innodb_file_per_table is on, and the database has been OPTIMIZEd, only the following is stored in ibdata1 [0]:
Just look at the very page you linked to. It's a totally confusing concept that befuddles users and causes questions "we often receive", starts "panic", can "unfortunately" not easily be analyzed and you might need to "kill threads" and initiate "rollbacks" to fix the problems it brings.
Ok but I don't get why you're so obsessed with the fs layout anyway. You should mostly treat it as a black box. And the point of ibdata1 is safety, which as you stated higher up is a serious problem with MyISAM. Even if it's not oom situations, you'll end up stuck sooner or later. You have been warned.
Google "ibdata1 one file per table" to see all the pain it causes.