This paper describes a search for beyond the Standard Model decays of the Higgs boson into a pair of new spin-0 particles subsequently decaying into $b$-quark pairs, $H \rightarrow aa \rightarrow (b\bar{b})(b\bar{b})$, using proton-proton collision data collected by the ATLAS detector at the Large Hadron Collider at center-of-mass energy $\sqrt{s}=13$ TeV. This search focuses on the regime where the decay products are collimated and in the range $15 \leq m_a \leq 30$ GeV and is complementary to a previous search in the same final state targeting the regime where the decay products are well separated and in the range $20 \leq m_a \leq 60$ GeV. A novel strategy for the identification of the $a \rightarrow b\bar{b}$ decays is deployed to enhance the efficiency for topologies with small separation angles. The search is performed with 36 fb$^{-1}$ of integrated luminosity collected in 2015 and 2016 and sets upper limits on the production cross-section of $H \rightarrow aa \rightarrow (b\bar{b})(b\bar{b})$, where the Higgs boson is produced in association with a $Z$ boson.
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