Limits
What the plugin does not do.
No per-field opt-out
Folders are switched on or off per collection, through Payload's own folders: true. There is no way to say "folders in this field, but not in that one", because the list drawer carries no information about which field opened it.
Turning the picker off for a collection means removing folders: true from it, which also removes Payload's own By folder tab on the route.
Documents without a folder are hidden
The folder view only lists documents that have a folder assigned. Unfiled documents are invisible there, exactly as in Payload's own folder view; they are still reachable from the All tab.
Assign a folder first if a document must be pickable by folder.
Folders belong to collections
A folder carries folderType, the list of collections whose documents it may hold. A folder created while picking for media does not appear when picking for files.
For a polymorphic upload field (relationTo: ['media', 'files']) this means one folder tree per collection, never a merged one. The drawer's collection select sits above the folder view exactly as it does above the list, so switching between those trees takes one click.
Collections with a custom list view are skipped
If a collection already declares admin.components.views.list.Component, the plugin leaves it alone and the collection keeps the stock drawer. To get both, render the plugin's view from your own.