A folder allows a teacher to display several course resources together. The resources may be of different types and they may be uploaded in one go, as a zipped folder which is then unzipped, or they may be added one at a time to an empty folder on the course page.
When the folder icon is clicked, the resources it contains are displayed for the student:
Using a folder to display resources is neater than displaying files one by one in a list. It takes up less space on the course page.
The downside is that at present you are forced to download files stored in a folder resource. You cannot have (for example) a folder of pictures where the user can view the pictures in Moodle without a download.