there was some recent discussion of this over at reddit, https://www.reddit.com/r/emacs/comments/tejte0/undotree_bug_undotree_files_scattering_everywhere/

thanks!

(use-package undo-tree
  :bind
  (("C-z" . undo-tree-undo)
   ("C-c z" . undo-tree-visualize))
  :init
  (let ((undo-tree-history-directory (expand-file-name "undo-tree" user-emacs-directory)))
    (setq undo-tree-history-directory-alist `(("." . ,undo-tree-history-directory))))
  :config
  (global-undo-tree-mode t))