A zip named mod.zip will not be loaded if a folder named mod exists in the Mods directory that contains a .lovelyignore even if mod.zip itself does not have a .lovelyignore.
I'm not sure if this extends to mods in general (e.g. if you have Mods/a/b with Mods/a/b/.lovelyignore and Mods/b/bleh.json will Mods/b load or not?)
The same zip is loaded by lovely.