SharePoint Folders and Document Set Best Practices

The general consensus is to move away from folders and instead convert the taxonomy to metadata fields or convert to sites and libraries.  This is typically hardest to do when migrating from a file system into SharePoint.  If you do decide to do this, make sure to disable folder creation at the library level.  This won't stop explorer view from creating folders, but does remove it in-browser.

Users typically want to use folders for navigation.  This is usually due to a lack of proper site structure, navigation, views, search, and metadata.  Grouping within a view can be used to simulate folder based navigation and help with user adoption.

There are plenty of articles on how folders are bad, so I'll just list the main justifications for using them and possible workarounds.  If you must use folders, consider using document sets instead (see document set features below)

If you do want to use folders it should be for one of the following concrete reasons:

• Different security but the files should appear in the same views
• If they don't need to be viewed together, move them to new libraries
• Even if they do, consider a third party library rollup / library collection web part instead
• This would allow you to view multiple libraries in one view
• Explorer view usage (if explorer view is the primary mechanism for working with files)
• This is not recommended except in bulk document management scenarios
• Note that explorer view works with doc sets and separate libraries as well and these should be preferred over folders
• Document Set feature usage 
• Doc sets are library root level folders with advanced features
• They cannot be nested - This is a good thing
• Features:
• Custom page for viewing/managing the grouped documents
• Versioning multiple files in a group
• Configure metadata for a group of documents simultaneously
• Running a workflow against a group of documents
• Preload several documents as a single group
• Email enabled libraries
• This is your only option for grouping the email and attachments into a single unit
• I recommend converting the email folders to document sets as they come in
• Refer to my SharePoint 2010 folder to document set conversion fix
• Too many groupings to manage
• Consider a keyword taxonomy field, lookup, choice with add item enabled, or single line of text metadata field instead