Do you indend to share the code and files for your game? If not then put it where you like. If you plan to share the code then I'd be tempted to keep the license for that code in a folder with it, and move that readme to it.
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I find the way godot handles files in a plugin a bit poor. If the license file is outside the add-ons folder of the add-on, then it will add it in the main path of your project. I understand it's a GitHub thing, but adding multiple add-ons and having file collisions is not fun.
I see this kind of poor add-on "hygiene" alot, but I thought Godot flagged when this happened in the install dialog and you can uncheck anything that's outside of the addon folder. I'm pretty sure that now the damage is done you can just delete any non-code or non-resource files it added. Maybe do a commit before doing so, but it should be OK. If the addon has a license file (which is recommened in the Godot docs), it should only ever be in the addon folder itself and only pertains to the addon.
Aah I see! I'll double check next time the dialogue options it might be possible that it just passed me though I think the default should be reversed if that's the case!
And I was wondering about the addon if it might change my project License. Thanks for the clarification! :)
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