This has to be a bug. There's no reasonable explanation for why ALL artists starting with "The" are suddenly filed under T. Also, Saved Songs (or liked songs or whatever they're calling it now) behaves correctly with "The" being ignored and the first letter of the 2nd word being how it's filed. Only playlists are using this broken system and it needs to be reverted.
I've contacted Spotify Support on Twitter every day trying to get this fixed. Spotify behaves as expected after a fresh install but as soon as the app is closed and reopened, it goes back to this mess.