diff --git a/CHANGELOG.md b/CHANGELOG.md
index 7f0ab12dcf..b35ccabe8b 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -53,6 +53,7 @@ attribute, which is used for container domain name in NNS contracts (#2954)
 - Deprecate peapod substorage (#3013)
 - Node does not stop trying to PUT an object if there are more PUT tasks than configured (#3027)
 - `morph` configuration section renamed to `fschain` both in IR and SN (#3028)
+- FSTree is limited to depth 8 max now (#3031)
 
 ### Removed
 - Support for node.key configuration (#2959)
diff --git a/pkg/local_object_storage/blobstor/blobstor.go b/pkg/local_object_storage/blobstor/blobstor.go
index 4a77cf01f6..30f91f83c2 100644
--- a/pkg/local_object_storage/blobstor/blobstor.go
+++ b/pkg/local_object_storage/blobstor/blobstor.go
@@ -68,6 +68,9 @@ func New(opts ...Option) *BlobStor {
 // SetLogger sets logger. It is used after the shard ID was generated to use it in logs.
 func (b *BlobStor) SetLogger(l *zap.Logger) {
 	b.log = l
+	for i := range b.storage {
+		b.storage[i].Storage.SetLogger(l)
+	}
 }
 
 // WithStorages provides sub-blobstors.
@@ -105,11 +108,3 @@ func WithUncompressableContentTypes(values []string) Option {
 		c.compression.UncompressableContentTypes = values
 	}
 }
-
-// SetReportErrorFunc allows to provide a function to be called on disk errors.
-// This function MUST be called before Open.
-func (b *BlobStor) SetReportErrorFunc(f func(string, error)) {
-	for i := range b.storage {
-		b.storage[i].Storage.SetReportErrorFunc(f)
-	}
-}
diff --git a/pkg/local_object_storage/blobstor/common/storage.go b/pkg/local_object_storage/blobstor/common/storage.go
index 692736499b..2fac4da59a 100644
--- a/pkg/local_object_storage/blobstor/common/storage.go
+++ b/pkg/local_object_storage/blobstor/common/storage.go
@@ -5,6 +5,7 @@ import (
 
 	"github.com/nspcc-dev/neofs-node/pkg/local_object_storage/blobstor/compression"
 	oid "github.com/nspcc-dev/neofs-sdk-go/object/id"
+	"go.uber.org/zap"
 )
 
 // Storage represents key-value object storage.
@@ -16,10 +17,8 @@ type Storage interface {
 
 	Type() string
 	Path() string
+	SetLogger(*zap.Logger)
 	SetCompressor(cc *compression.Config)
-	// SetReportErrorFunc allows to provide a function to be called on disk errors.
-	// This function MUST be called before Open.
-	SetReportErrorFunc(f func(string, error))
 
 	// GetBytes reads object by address into memory buffer in a canonical NeoFS
 	// binary format. Returns [apistatus.ObjectNotFound] if object is missing.
diff --git a/pkg/local_object_storage/blobstor/fstree/doc.go b/pkg/local_object_storage/blobstor/fstree/doc.go
new file mode 100644
index 0000000000..80c03272c8
--- /dev/null
+++ b/pkg/local_object_storage/blobstor/fstree/doc.go
@@ -0,0 +1,57 @@
+/*
+Package fstree implements a storage subsystem that saves objects as files in FS tree.
+
+The main concept behind it is rather simple: each object is stored as a file
+in a directory. Given that handling many files in the same directory is usually
+problematic for file systems objects are being put into subdirectories by their
+IDs. This directory tree can have different [FSTree.Depth] and each component
+of the path (single directory name) is a [DirNameLen] number of ID bytes from
+its string representation. File name then is a leftover of object ID (after
+stripping [FSTree.Depth] bytes off of it) concatenated with container ID.
+
+For example, an object with ID of WCdSV7F9TnDHFmbgKY7BNCbPs6g7meaVbh6DMNXbytB
+from Hh6qJ2Fa9WzSK7PESResS4mmuoZ2a47Z7F6ZvmR7AEHU container will be stored
+in W/C/d/S/V directory and a name of 7F9TnDHFmbgKY7BNCbPs6g7meaVbh6DMNXbytB.Hh6qJ2Fa9WzSK7PESResS4mmuoZ2a47Z7F6ZvmR7AEHU
+if the depth is 5. The overall structure may look like this (a part of it):
+
+	/W/
+	├── 7
+	│   └── 2
+	│       └── F
+	│           └── 6
+	│               └── 32vhigDXRPkSwaCTw3FtxWbKjoDGoDvVTJqxBb.J4SkhNifjANvYGr56vh4NbGBRCxvk8PT9YE5EgFSb7cc
+	├── C
+	│   └── d
+	│       └── S
+	│           └── V
+	│               └── 7F9TnDHFmbgKY7BNCbPs6g7meaVbh6DMNXbytB.Hh6qJ2Fa9WzSK7PESResS4mmuoZ2a47Z7F6ZvmR7AEHU
+
+Binary file format can differ depending on the FSTree version. The basic format
+that was used from the beginning is storing serialized protobuf representation
+of the object as is. In this case file can be decoded into an object directly.
+If compression is configured then the same file can have a compressed (ZSTD)
+serialized protobuf.
+
+Version 0.44.0 of the node has introduced a new file format that is used for
+small files, the so-called "combined" one. It has a special prefix (0x7F) that
+can not collide with protobuf-encoded or ZSTD-compressed data. Files using
+this prefix can contain an unspecified number of objects (configured via
+[WithCombinedCountLimit]) that all follow the same serialization pattern:
+  - the first byte is magic 0x7F described above
+  - one byte version of the subsequent structure (currently zero only)
+  - 32-byte OID of the next object then
+  - 4-byte BE integer length of the next object
+  - followed by protobuf-encoded or ZSTD-compressed object data (of the length
+    specified in the previous field)
+
+Overall the structure is like this:
+
+	[0x7F 0x00 [OID A] [uint32 size]][object A][0x7F 0x00 [OID B] [uint32 size]][object B]...
+
+Even though this file contains several objects it has hard links for all of
+them in the FS tree, so finding a file containing some object doesn't require
+any additional effort. Finding it in the file contents however requires
+reading the prefix described above, comparing the target OID and either
+skipping the object length specified there or reading it after the prefix.
+*/
+package fstree
diff --git a/pkg/local_object_storage/blobstor/fstree/fstree.go b/pkg/local_object_storage/blobstor/fstree/fstree.go
index 5f39437397..e520fe60c4 100644
--- a/pkg/local_object_storage/blobstor/fstree/fstree.go
+++ b/pkg/local_object_storage/blobstor/fstree/fstree.go
@@ -2,7 +2,6 @@ package fstree
 
 import (
 	"bytes"
-	"crypto/sha256"
 	"encoding/binary"
 	"errors"
 	"fmt"
@@ -22,6 +21,7 @@ import (
 	cid "github.com/nspcc-dev/neofs-sdk-go/container/id"
 	objectSDK "github.com/nspcc-dev/neofs-sdk-go/object"
 	oid "github.com/nspcc-dev/neofs-sdk-go/object/id"
+	"go.uber.org/zap"
 )
 
 // FSTree represents an object storage as a filesystem tree.
@@ -29,6 +29,7 @@ type FSTree struct {
 	Info
 
 	*compression.Config
+	log        *zap.Logger
 	Depth      uint64
 	DirNameLen int
 	writer     writer
@@ -60,14 +61,28 @@ type writer interface {
 const (
 	// DirNameLen is how many bytes is used to group keys into directories.
 	DirNameLen = 1 // in bytes
-	// MaxDepth is maximum depth of nested directories.
-	MaxDepth = (sha256.Size - 1) / DirNameLen
+	// MaxDepth is maximum depth of nested directories. 58^8 is 128e12 of
+	// directories, enough for a single FSTree.
+	MaxDepth = 8
 
 	// combinedPrefix is the prefix that Protobuf message can't start with,
 	// it reads as "field number 15 of type 7", but there is no type 7 in
 	// the system (and we usually don't have 15 fields). ZSTD magic is also
 	// different.
 	combinedPrefix = 0x7f
+
+	// combinedLenSize is sizeof(uint32), length is a serialized 32-bit BE integer.
+	combinedLenSize = 4
+
+	// combinedIDOff is the offset from the start of the combined prefix to OID.
+	combinedIDOff = 2
+
+	// combinedLengthOff is the offset from the start of the combined prefix to object length.
+	combinedLengthOff = combinedIDOff + oid.Size
+
+	// combinedDataOff is the offset from the start of the combined prefix to object data.
+	// It's also the length of the prefix in total.
+	combinedDataOff = combinedLengthOff + combinedLenSize
 )
 
 var _ common.Storage = (*FSTree)(nil)
@@ -350,19 +365,19 @@ func getRawObjectBytes(id oid.ID, p string) ([]byte, error) {
 	return data, nil
 }
 
-func extractCombinedObject(id oid.ID, f *os.File) ([]byte, error) {
-	const (
-		prefixSize = 1
-		idSize     = sha256.Size
-		lengthSize = 4
-
-		idOff     = prefixSize
-		lengthOff = idOff + idSize
-		dataOff   = lengthOff + lengthSize
-	)
+// parseCombinedPrefix checks the given array for combined data prefix and
+// returns a subslice with OID and object length if so (nil and 0 otherwise).
+func parseCombinedPrefix(p [combinedDataOff]byte) ([]byte, uint32) {
+	if p[0] != combinedPrefix || p[1] != 0 { // Only version 0 is supported now.
+		return nil, 0
+	}
+	return p[combinedIDOff:combinedLengthOff],
+		binary.BigEndian.Uint32(p[combinedLengthOff:combinedDataOff])
+}
 
+func extractCombinedObject(id oid.ID, f *os.File) ([]byte, error) {
 	var (
-		comBuf     [dataOff]byte
+		comBuf     [combinedDataOff]byte
 		data       []byte
 		isCombined bool
 	)
@@ -378,7 +393,11 @@ func extractCombinedObject(id oid.ID, f *os.File) ([]byte, error) {
 			}
 			return nil, err
 		}
-		if comBuf[0] != combinedPrefix {
+		thisOID, l := parseCombinedPrefix(comBuf)
+		if thisOID == nil {
+			if isCombined {
+				return nil, errors.New("malformed combined file")
+			}
 			st, err := f.Stat()
 			if err != nil {
 				return nil, err
@@ -396,8 +415,7 @@ func extractCombinedObject(id oid.ID, f *os.File) ([]byte, error) {
 			return data, nil
 		}
 		isCombined = true
-		var l = binary.BigEndian.Uint32(comBuf[lengthOff:dataOff])
-		if bytes.Equal(comBuf[idOff:lengthOff], id[:]) {
+		if bytes.Equal(thisOID, id[:]) {
 			data = make([]byte, l)
 			_, err = io.ReadFull(f, data)
 			if err != nil {
@@ -473,9 +491,9 @@ func (t *FSTree) SetCompressor(cc *compression.Config) {
 	t.Config = cc
 }
 
-// SetReportErrorFunc implements common.Storage.
-func (t *FSTree) SetReportErrorFunc(_ func(string, error)) {
-	// Do nothing, FSTree can encounter only one error which is returned.
+// SetLogger sets logger. It is used after the shard ID was generated to use it in logs.
+func (t *FSTree) SetLogger(l *zap.Logger) {
+	t.log = l.With(zap.String("substorage", Type))
 }
 
 // CleanUpTmp removes all temporary files garbage.
diff --git a/pkg/local_object_storage/blobstor/fstree/fstree_write_linux.go b/pkg/local_object_storage/blobstor/fstree/fstree_write_linux.go
index 26acc76e54..3a45dc9bad 100644
--- a/pkg/local_object_storage/blobstor/fstree/fstree_write_linux.go
+++ b/pkg/local_object_storage/blobstor/fstree/fstree_write_linux.go
@@ -12,6 +12,7 @@ import (
 
 	"github.com/nspcc-dev/neofs-node/pkg/local_object_storage/blobstor/common"
 	oid "github.com/nspcc-dev/neofs-sdk-go/object/id"
+	"go.uber.org/zap"
 	"golang.org/x/sys/unix"
 )
 
@@ -51,6 +52,7 @@ func newSpecificWriter(t *FSTree) writer {
 	}
 	fd, err := unix.Open(t.RootPath, flags, uint32(t.Permissions))
 	if err != nil {
+		t.log.Warn("optimized batching writer is disabled", zap.Error(err))
 		return nil // Which means that OS-specific writeData can't be created and FSTree should use the generic one.
 	}
 	_ = unix.Close(fd) // Don't care about error.
@@ -123,11 +125,11 @@ func (b *syncBatch) wait() error {
 func (b *syncBatch) write(id oid.ID, p string, data []byte) error {
 	var (
 		err  error
-		pref [1 + len(id) + 4]byte
+		pref [combinedDataOff]byte
 	)
 	pref[0] = combinedPrefix
-	copy(pref[1:], id[:])
-	binary.BigEndian.PutUint32(pref[1+len(id):], uint32(len(data)))
+	copy(pref[combinedIDOff:], id[:])
+	binary.BigEndian.PutUint32(pref[combinedLengthOff:], uint32(len(data)))
 
 	n, err := unix.Writev(b.fd, [][]byte{pref[:], data})
 	if err != nil {
diff --git a/pkg/local_object_storage/blobstor/get_test.go b/pkg/local_object_storage/blobstor/get_test.go
index b436d5415c..75ca87d5e2 100644
--- a/pkg/local_object_storage/blobstor/get_test.go
+++ b/pkg/local_object_storage/blobstor/get_test.go
@@ -28,9 +28,7 @@ func (x *getBytesOnlySubStorage) Close() error                         { panic("
 func (x *getBytesOnlySubStorage) Type() string                         { panic("must not be called") }
 func (x *getBytesOnlySubStorage) Path() string                         { panic("must not be called") }
 func (x *getBytesOnlySubStorage) SetCompressor(cc *compression.Config) { panic("must not be called") }
-func (x *getBytesOnlySubStorage) SetReportErrorFunc(f func(string, error)) {
-	panic("must not be called")
-}
+func (x *getBytesOnlySubStorage) SetLogger(_ *zap.Logger)              { panic("must not be called") }
 
 func (x *getBytesOnlySubStorage) Get(prm common.GetPrm) (common.GetRes, error) {
 	panic("must not be called")
diff --git a/pkg/local_object_storage/blobstor/peapod/peapod.go b/pkg/local_object_storage/blobstor/peapod/peapod.go
index e8208120a8..4efa0e7601 100644
--- a/pkg/local_object_storage/blobstor/peapod/peapod.go
+++ b/pkg/local_object_storage/blobstor/peapod/peapod.go
@@ -20,6 +20,7 @@ import (
 	objectSDK "github.com/nspcc-dev/neofs-sdk-go/object"
 	oid "github.com/nspcc-dev/neofs-sdk-go/object/id"
 	"go.etcd.io/bbolt"
+	"go.uber.org/zap"
 )
 
 type batch struct {
@@ -48,6 +49,7 @@ type Peapod struct {
 	flushInterval time.Duration
 
 	compress *compression.Config
+	log      *zap.Logger
 
 	readOnly bool
 
@@ -274,8 +276,9 @@ func (x *Peapod) SetCompressor(cc *compression.Config) {
 	x.compress = cc
 }
 
-func (x *Peapod) SetReportErrorFunc(func(string, error)) {
-	// no-op like FSTree
+// SetLogger sets logger. It is used after the shard ID was generated to use it in logs.
+func (x *Peapod) SetLogger(l *zap.Logger) {
+	x.log = l.With(zap.String("substorage", Type))
 }
 
 // Get reads data from the underlying database by the given object address.
diff --git a/pkg/local_object_storage/shard/shard.go b/pkg/local_object_storage/shard/shard.go
index 16653ecdee..6dcd729c90 100644
--- a/pkg/local_object_storage/shard/shard.go
+++ b/pkg/local_object_storage/shard/shard.go
@@ -132,8 +132,6 @@ func New(opts ...Option) *Shard {
 		s.reportErrorFunc(s.ID().String(), msg, err)
 	}
 
-	s.blobStor.SetReportErrorFunc(reportFunc)
-
 	if c.useWriteCache {
 		s.writeCache = writecache.New(
 			append(c.writeCacheOpts,