This page is where you control and manage your folders. It is only available if you're using an IMAP account. The folder listing simply lists all available folders and their statistics (assuming folder stats are turned on). The checkbox to the left of the folder name is an indication of whether the folder is currently subscribed to or not. If the folder is not subscribed to then it will not appear on the left folder listing frame, and nor on any of the folder dropdown lists.
The buttons on the right of each folder are:
The "Save subscriptions" button underneath the folder list will store the current status of the subscribed folders. The "Create folder" button creates a new folder with the folder prefix prepended to the name given.