It might have been better to transliterate "матрёшка" as "matryoshka" rather than "matroschka". Since ё is a "yo" sound, it seems more phonetically accurate.

Thanks for the comment. Matroschka is the German transliteration.

FWITW, in Russian matroska is something a seaman may have, a hat for example. Matroshka is is nesting wooden doll which seems appropriate here.

That's because the matroška container format is often formated as just "matroska" which happens to be a different word. The "š" is the character used for the "sh" sound in slavic languages that use the latin alphabet such as Croatian. "Matroshka" is an anglicized spelling, while "Matroschka" is a germinized spelling.