what is this option in game bar recording?

You can open Game bar and click record. That allows you to record for how ever long you need. Yes it will be one file but it slows the game down and displays a recording icon. you can also record the last 10 minutes without the slow down and icon that
is what Recording in the background is.

Glad to hear it helped you out. Good luck with creating your video.

Background recording is only a temp file so you can push the Record That keys to capture video. This feature does impact system performance on some PC and games so if you're experiencing any game issues while using the background recording try turning
it off for that game.

If you press Windows+Alt+G it will record only the last (previous) 10 minutes of footage. You can change this to a shorter time say 30 seconds if you just want to capture a cool kill for example.

If you press Windows+Alt+R it will start recording until you tell it to stop. Use this for your 1 hour video.

I'm pretty sure it will create a single file.

Glad to hear it helped you out. Good luck with creating your video.

Thank you brother.