CentOS 6.6, MariaDB 10.1

Please check if any files in /etc/my.cnf.d also contain the same setting.

I saw https://bugs.mysql.com/bug.php?id=69441. No, none of the files within /etc/my.cnf.d contain the same setting.

I should probably also add that this only seems to affect mysql_install_db. If I remove ignore-db-dirs from my.cnf, run mysql_install_db, add ignore-db-dirs back to my.cnf, mysqld starts fine and processes ignore-db-dirs.

It just dawned on me that the parameter to mysql_install_db, `defaults-extra-file=/etc/my.cnf` might be causing mysql_install_db to process /etc/my.cnf twice since `/etc/my.cnf` is the default file. That does seem to be the case. If I run mysql_install_db with `defaults-file=/etc/my.cnf` no error is thrown.

That's right. But if you ran mysqld with the same defaults-extra-file, you should have experienced the same problem.

You're correct however mysqld isn't started with a `defaults-extra-file` parameter. I am using Puppet to deploy MariaDB and I am at the mercy of the Puppet module. I am not sure why they chose to use `defaults-extra-file` for mysql_install_db but I'll look into it.

So this does look like a manifestation of https://bugs.mysql.com/bug.php?id=69441?

Okay, now it's clear. Thanks for the report.
Yes, the problem you encountered is https://bugs.mysql.com/bug.php?id=69441. It's been fixed in MySQL 5.7, and the fix needs to be merged to MariaDB 10.x (or re-done, if it's not good enough).

For a note, while experimenting with it, I've found another issue with mysql_install_db processing ignore_db_dirs.
If the option is provided on the command line, even once and without any default files involved, it causes the exact same error

 scripts/mysql_install_db --no-defaults --ignore-db-dir=xxxx 

Installing MariaDB/MySQL system tables in './data' ...

2016-04-22 19:46:50 140679461701504 [Note] ./bin/mysqld (mysqld 10.1.13-MariaDB) starting as process 17497 ...

2016-04-22 19:46:50 140679461701504 [ERROR] An error occurred while storing ignore_db_dirs to a hash.

2016-04-22 19:46:50 140679461701504 [ERROR] Aborting

It happens because while preparing the bootstrap command line, mysql_install_db goes through the arguments twice, so they end up being duplicated on final command line:

> scripts/mysql_install_db --no-defaults --ignore-db-dir=xxxx --lock-wait-timeout=5

./bin/mysqld --no-defaults --lc-messages=en_US --bootstrap --basedir=. --datadir=./data --log-warnings=0 --enforce-storage-engine=  --ignore-db-dir=xxxx --lock-wait-timeout=5 --ignore-db-dir=xxxx --lock-wait-timeout=5 --max_allowed_packet=8M --net_buffer_length=16K

The specific problem with ignore-db-dir will disappear after the server part is fixed, but still providing duplicate options is not good, so it would be useful to fix the script as well.
In MySQL 5.6 it was fixed apparently when mysql_install_db was rewritten in Perl.

Patch for the server:
http://lists.askmonty.org/pipermail/commits/2016-June/009456.html

Patch to the mysql_install_db scripts: http://lists.askmonty.org/pipermail/commits/2016-June/009457.html