A Project Folder contains projects related to the same property or subject. You can create your own Project Folders (named however you want to name them) or they maybe automatically created for you (if automatically created they have the property address as the folder name).
The photos you upload are also organized by project folder. When working with images there is a menu available to you which allows you to choose which project folder to view images for.
Organizing related projects within the same folder helps in the use of the Phrase Assistant by making it easier to use text from previous projects.