You have not missed a setting, and the reason nothing has broken is worth understanding properly, because it is also the reason that button is dangerous.
What changed. The pattern for newly generated entity IDs picked up the area as a prefix in the 2026.6 release; 2026.5.4 is the last version that generated them without it. So the shape went from device_property to area_device_property.
Why yours is doubled. Because the area is in your device name as well. Nothing checks for that — the area segment is prepended whether or not the device name already contains the same word. Everybody who adopted your convention got the same result, and for the same reason: the convention exists precisely because the ID used to lack the area.
Why nothing broke. This is the important half. An entity ID is reserved, not derived. An entity that reports a unique ID claims its entity ID the first time it is registered and keeps that string forever afterwards. It is stored in the registry, not recomputed from the device name and area each time it loads. Upgrading therefore renames nothing, which is why your old dashboards are fine and always were going to be.
So the new pattern only ever touches entities that are created after you upgraded. In practice that means:
- a new device or a new integration
- an entity you enable that had been disabled on a device you already had
- removing and re-adding something
- helpers you create from the UI
- and anything you deliberately regenerate
Which brings you to the button. No, it is not safe as a tidying tool, and it is the one operation that converts your cosmetic inconsistency into a real outage. "Recreate entity IDs" throws away the reservation and generates a fresh ID under whatever the current pattern is. That is not a repair — it is exactly the rename you have so far avoided, applied on purpose.
One more thing that surprises people: the area in the ID is a snapshot of the moment the entity was created. Move the device to another room afterwards and the ID keeps the old area in it. It does not follow the device, and nothing warns you that it has gone stale.