I merged the site settings related to muted tags (remove muted tags from latest and mute other present tags) into setting remove muted tags from latest with 3 options never , when used alone or with other muted tags or always. The new default value is always.
Previously, mute other present tags had no effect unless remove muted tags from latest was also enabled. The new changes should clear up the confusion.
https://github.com/discourse/discourse/pull/7656
Thanks @Stranik for pointing this out.