The performance hit wouldn't be in MC, but you would notice it in Windows if you ever tried to look at the contents of any folder with a few tens of thousands of audio files in it using Windows Explorer!
Best practice is to use sub-folders at least to some degree, which is why the default directory structure for audio files is typically \Artist\Album\ for many audio applications, including MC. But MC uses its Library, which is an index of all "imported" files it knows about, so I don't think it would be slowed by having a few tens of thousands of audio files in one folder. MC doesn't care where the files are stored, it just needs to know where they are. Not that I have tried that. My 27,000+ audio files are spread over many sub-folders. My main HTPC Library has a total of 38,219 files indexed in it currently, and is only 31.3MB in size. The whole thing fits comfortably in memory, and only writes back to the Library files themselves are a constraint.
I'm sure you can Google if there are any actual limits to the number of files in a sub-directory on an NTFS, exFAT, or any other file system. Certainly, there used to be limits to the number of files that could be stored in the root directory of a drive, but I think any limit is pretty high these days. Once again though, best practice is to define a base directory for all music files, such as D:\Music, and then put the Artist and Album sub-directories below that, so D:\Music\Artist\Album\Track.ext would be the full path.
It is best practice to use an SSD as a boot disk these days, and also to store the MC Library (the index, not the files) on the SSD as well, to get the best performance. But MC will work fine on a traditional hard drive.
Does that help?