Reported upstream also :

https://bugzilla.gnome.org/show_bug.cgi?id=779795

Until it's fixed for specific filetypes (and/or depending on overall preference) you can disable this entirely by unchecking 'Extract the files on open' in Nautilus Preferences -> Behavior, or by running:

╶➤ gsettings set org.gnome.nautilus.preferences automatic-decompression false

...which I believe I'll keep, because this is just obnoxious.  Who wants random archive contents spilled all over their disks?

Thanks for the workaround, which I believe I'll keep too.

Perfect workaround.

Maybe it should be the default. I see the upstream bug has a lenghty discussion.

I can confirm this on Fedora 25 and Fedora 26 with nautilus-3.23.92-1.fc26.x86_64.

Proposing as a blocker for F26 under:
"All applications that can be launched using the standard graphical mechanism of a release-blocking desktop after a default installation of that desktop must start successfully and withstand a basic functionality test."
https://fedoraproject.org/wiki/Fedora_26_Final_Release_Criteria#Default_application_functionality

It is expected that you can double-click MS Office files in your file manager and LibreOffice opens up. Opening up files in applications is considered a basic functionality by me.

As an anecdote, my wife discovered this problem a few days ago and was utterly confused that she clicked a document and "something wrong happened" - not only LibreOffice was not opened up, but "something was messed up in her folder" (in a folder with lots of files, you won't likely notice that the docx/xlsx/pptx file was extracted into a new folder, since the current auto-extract functionality is not very obvious, you just know something changed, files jumped positions - and you'll be confused when you find the extracted directory sometime later and won't know what it is).

gnome-autoar-0.2.2-1.fc25 has been submitted as an update to Fedora 25. https://bodhi.fedoraproject.org/updates/FEDORA-2017-072b0ab1b5

gnome-autoar-0.2.2-1.fc26 has been submitted as an update to Fedora 26. https://bodhi.fedoraproject.org/updates/FEDORA-2017-e6e9dd4432

Proposing as Alpha freeze exception. This is a low risk bug fix, fixing an embarrassing issue that reviewers might discover when testing Workstation live media.

Not super important to get in, but might be nice.

(In reply to Fedora Update System from comment #7)
> gnome-autoar-0.2.2-1.fc26 has been submitted as an update to Fedora 26.
> https://bodhi.fedoraproject.org/updates/FEDORA-2017-e6e9dd4432

Fixes the problem.

gnome-autoar-0.2.2-1.fc25 has been pushed to the Fedora 25 testing repository. If problems still persist, please make note of it in this bug report.
See https://fedoraproject.org/wiki/QA:Updates_Testing for
instructions on how to install test updates.
You can provide feedback for this update here: https://bodhi.fedoraproject.org/updates/FEDORA-2017-072b0ab1b5

gnome-autoar-0.2.2-1.fc26 has been pushed to the Fedora 26 testing repository. If problems still persist, please make note of it in this bug report.
See https://fedoraproject.org/wiki/QA:Updates_Testing for
instructions on how to install test updates.
You can provide feedback for this update here: https://bodhi.fedoraproject.org/updates/FEDORA-2017-e6e9dd4432

gnome-autoar-0.2.2-1.fc25 has been pushed to the Fedora 25 stable repository. If problems still persist, please make note of it in this bug report.

Reopening for F26 freeze exception consideration.

+1 FE.

I'm +1 FE on this too, seems reasonable.

+1 FE

That's +3 FE, marking accepted.

gnome-autoar-0.2.2-1.fc25 fixes the problem for me too. Thanks.

gnome-autoar-0.2.2-1.fc26 has been pushed to the Fedora 26 stable repository. If problems still persist, please make note of it in this bug report.

As this is fixed in F25 and F26, don't think it needs commonbugs.