Other than making it easy for a human to work out what files are related to there is no purpose... Everything could just be in the root of c for all the computer cares
I believe I am right in saying files are not actually in any folders they are just associated with it.
I think a folder is just a entry in the file system database.
If you format a drive and do a data recovery you can get the files but the folder information is lost because the database was trashed and overwritten with an empty one
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