A Folder Share keeps two or more folders completely in-sync with each other so that any change to the folder or its contents (adds, deletes, check ins, renames, etc) is automatically updated in all folders that are part of the share. This has the effect of introducing a secondary share on all the files and subfolders within the shared folder to their counterparts in the other links of the shared folder.
For example, if $/foo/bar is shared with $/xyx/bar, you can share $/foo/bar/a.txt to $/a.txt, and $/a.txt automatically becomes shared with $/xyz/bar/a.txt too. A file share icon now appears on all three links. Breaking the share at either $/foo/bar/a.txt or $/xyz/bar/a.txt will break it from both places (due to the folder share), and $/a.txt will become unshared (although if a fourth link had been created, $/a.txt and the fourth link would remain shared with each other).