Microsoft has already confirmed that Live Folders are actually a thing, so all that's left now is for the first Windows Phone 8.1 update to start rolling out to users (though developers will be getting a taste of it much sooner). In the meantime, if you've been wondering what this Live Folder thing is all about, the following pair of videos give a glimpse of what it can do.
As the name points out, Live Folders will allow Windows Phone users to group tiles in the Start screen, basically an organizational tool more than an aesthetic one. But rather than go with simple boring folders, Microsoft took a cue from its own Live tiles and implemented some dynamic changing views. In essence, Live tiles dropped into a Live Folder will continue to display its dynamic content, but now constrained in just a section of the space being occupied by the Live Folder tile.
Creating a Live Folder seems easy enough and similar to how other mobile platform do it. Simply drag one tile over another and drop it there, creating a folder. What is a bit different is how Windows Phone displays an opened folder. iOS and Android, the latter depending on the homescreen, would overlay a window on top of the current screen to display the contents of the folder. In typical Modern (formerly known as "Metro") fashion, there are no overlapping windows. Instead, tiles beneath the folder would be pushed down to make room for the contents of the folder, which are then displayed inline, on same level and depth as the rest of the screen. To some extent, it does give a cleaner look, but at a glance it may be a bit confusing as there seems to be little to visually differentiate an expanded folder aside from the sliding animation and some horizontal lines.
Live Folder supposedly finally brings one most requested user feature to Windows Phone, but it could also raise questions about usability, especially with the Live content. On the Start screen, where the whole screen is your canvas, Live tiles can make some sense. In a Live Folder, the information density might be too concentrated to be useful. Of course, it all depends on how well the implementation and the design is executed, which we'll have to seen once the developer preview starts rolling out.
SOURCE: Windows Phone Lovers (YouTube channel)