These options control how Opus handles virtual folders that also have an underlying "real" disk folder behind them. Windows contains several folders like this - the Desktop is one, but others include the Fonts folder (usually C:\Windows\Fonts) and the Global Assembly Cache folder (usually C:\Windows\Assembly). These folders can be displayed in Opus in two different ways - as the underlying disk folder, in which case you will see all files in that folder, or as a virtual folder, in which case you will see the virtualized view that Windows provides.
Fonts as a virtual folder
Fonts as a real folder
The above screenshots show the difference between the virtualized and "real" views of the Fonts folder. You can choose from the following options: