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Folders in Formularize are basically just categories, I only called them folders to be a bit different than just "categories".  You will need at least one folder added before you can start creating forms. You can add folders in the ACP by going to Community->Formularize->Folders:

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Click on "create new", you will be presented with the folder form, it has several basic options.

Folder name: the name of the folder.

Description: if you want the folder to have a brief description to describe what kind of forms they might encounter here.

Anonymous Posting: if their group has the ability to anonymously post, allow the user to select this option when creating a form or taking a form.

Form Types: which form types to allow the form builder to create for this folder. so you can keep quizzes and forms in separate folders or lock out form types from other folders.

Quiz Expiration Wait: if you have enabled quiz or quiz wizard to be used in this folder. if the quiz has a timer, what this option does is forces them to wait x amount of hours before they can take the quiz again if the timer expires before they are finished. 

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the folders have a few standard permissions like view and read, and a few "non standard" ones. If View permissions aren't given to a group, then all the other permissions are ignored here. They can have submit permissions as long as they have view permissions, read permissions aren't required to be able to submit. after they have submitted, they will be taken to a "thankyou page" and shown the output of their entries to the form. 

Add Form: the ability for the group to create a form. this shouldn't be given to every group, but groups that you want to have the ability.

View Data Reports: allows them to access the aggregate and non aggregate results of the forms. 

Submit: allows the group to submit a form/quiz.

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