Seems like the "Record All Audio" option is not properly working. I have my desktop set up to use multiple audio channels, where Discord goes through one channel and the rest of my desktop goes through another. With "Record All Audio" enabled, it only seems to capture my own voice, then the game audio. Its not picking up the other people also talking.
That is correct, and unfortunately working as intended. The "Record All Audio" (which now that I think about is worded very badly) is just that it will record everything going through your default playback device (game, music, youtube videos, etc).
We currently don't have a method to record on several audio channels.