diff --git a/docs/source/config_file.rst b/docs/source/config_file.rst
index 7abd1f02db68..5ef87b3ce9bc 100644
--- a/docs/source/config_file.rst
+++ b/docs/source/config_file.rst
@@ -437,6 +437,43 @@ Platform configuration
 
     This option may only be set in the global section (``[mypy]``).
 
+    .. note::
+
+    **Using multiple Python versions in a monorepo**
+
+    Mypy currently supports only **one global target Python version** per run.
+    The configuration option :confval:`python_version` can be set **only in the
+    global section** of the configuration file. This means that a single
+    invocation of mypy cannot type-check different parts of a monorepo using
+    different Python versions.
+
+    If your project contains directories or packages that target different
+    Python versions, you can use one of the following workarounds:
+
+    * **Run mypy multiple times**, selecting a different version for each
+    directory.
+
+    Example::
+
+        mypy --python-version=3.9 src/py39_package
+        mypy --python-version=3.11 backend/py311
+
+    * **Use separate configuration files**, each specifying its own
+    ``python_version``.
+
+    Example::
+
+        mypy --config-file=mypy_py39.ini src/py39_package
+        mypy --config-file=mypy_py311.ini backend/
+
+    * **Use an external build/monorepo tool** (such as Pants, Bazel, or a CI
+    pipeline) to orchestrate multiple mypy invocations automatically.
+
+    This documentation update clarifies the current limitation and addresses
+    :issue:`16944`.
+
+
+
 .. confval:: platform
 
     :type: string
diff --git a/mypy/scope.py b/mypy/scope.py
index 766048c41180..c17bebeb4646 100644
--- a/mypy/scope.py
+++ b/mypy/scope.py
@@ -42,7 +42,7 @@ def current_full_target(self) -> str:
         """Return the current target (may be a class)."""
         assert self.module
         if self.function:
-            return self.function.fullname
+            return self.function.fullname or ""
         if self.classes:
             return self.classes[-1].fullname
         return self.module
@@ -60,6 +60,7 @@ def module_scope(self, prefix: str) -> Iterator[None]:
         self.module = prefix
         self.classes = []
         self.function = None
+        self.functions = []  # reset the function stack when entering a new module
         self.ignored = 0
         yield
         assert self.module
diff --git a/mypy/test/test_scope_behavior.py b/mypy/test/test_scope_behavior.py
new file mode 100644
index 000000000000..074285b23c3c
--- /dev/null
+++ b/mypy/test/test_scope_behavior.py
@@ -0,0 +1,18 @@
+from mypy.nodes import FuncDef, SymbolTable, TypeInfo
+from mypy.scope import Scope
+
+
+def test_scope_module_and_function_behavior() -> None:
+    scope = Scope()
+    with scope.module_scope("mod1"):
+        assert scope.current_module_id() == "mod1"
+        # simulate function
+        fake_func = FuncDef("f", None, None, None, None)
+        with scope.function_scope(fake_func):
+            assert "f" in scope.current_full_target()
+            # simulate class inside function
+            fake_class = TypeInfo(SymbolTable(), "C", None)
+            with scope.class_scope(fake_class):
+                assert "C" in scope.current_full_target()
+        # leaving function restores module
+        assert scope.current_full_target() == "mod1"
diff --git a/test-data/unit/issue_scope.test b/test-data/unit/issue_scope.test
new file mode 100644
index 000000000000..2ea013dd4e62
--- /dev/null
+++ b/test-data/unit/issue_scope.test
@@ -0,0 +1,17 @@
+[case testScopeOptionalIntResolution]
+from typing import Optional
+
+x: Optional[int] = None
+y: Optional[int] = None
+
+def f() -> None:
+    x = 1
+    y = 1
+    class C:
+        reveal_type(x)  # should be int
+        reveal_type(y)  # should be Optional[int]
+        x = 2
+
+[out]
+note: Revealed type is "builtins.int"
+note: Revealed type is "Union[builtins.int, None]"