It would restore all. However the mysqldump creates a plain text file and the databases are seperated into seperate sections. I have edited the dump file to just restore a single database. You could also just use mysqldump multiple times creating a seperate file for each database. Just remove the --all-databases and add the specific database name as the last argument.
mysqldump --complete-insert --opt -u username -ppassword databasename > backup.sql