Nothing was added you have used jni/*.c wildcard which was expanded into jni/file1.c jni/file2/.c use notdir function to strip directory part, that is:
LOCAL_SRC_FILES=$(notdir $(wildcard $(LOCAL_PATH)/*.c))
If you would like to create recursive list of source files you may use following functions:
# -----------------------------------------------------------------------------
# Creates subdirs list from given root (root is included) and append given
# suffix to each element
#
# Function : make-subdirs-list-with-suffix
# Returns : list of subdirs with suffix appended
# Usage : $(call make-subdirs-wildcards,<DIR>,<SUFFIX>)
# -----------------------------------------------------------------------------
make-subdirs-list-with-suffix = $(addsuffix $2, $(sort $(dir $(wildcard $1/**/))))
# -----------------------------------------------------------------------------
# List all files with given extension(s) from given directory and all of subdirs.
# Returned list is root relative (that is contains files in form: ./subdir/file.ext)
#
# Function : list-all
# Returns : list of files relative to root
# Usage : $(call list-all,<DIR>,<EXTENSIONS-LIST>)
# -----------------------------------------------------------------------------
list-all = $(subst $1, ., $(wildcard $(foreach ext,$2,$(call make-subdirs-list-with-suffix,$1,$(ext)))))