PDN says - Covers and folders are two built-in facilities that allow your application to support collections of work items. In contrast to covers:

• One work item may be associated with multiple folders, but only with one cover.
• Members of a folder can belong to different work types, which need not belong all in a single work pool.
• The relationships between folder work items and their contents may be many-to-many.

In simpler terms -

• Cover cannot be nested, folders can be nested (folders can consist of folder, cover, work-object)
• Cover can only consist of work object in single classgroup, but folder can consist of work object present in single or multiple classgroup
• When all covered workobjects is resolved, cover would be resolved. But folder never waits for all work object within it to be resolved.
• A workobject can be present in only one cover at a time, but it can be present in multiple folders at particular point of time

Did you look at these  -

https://community.pega.com/sites/default/files/help_v719/definitions/c/cover.htm

https://community.pega.com/sites/default/files/help_v719/definitions/f/folder.htm

To see an example of a cover and covered objects, use the PegaSample class group and run the CustomerRequest  class flow called "NewWork" ( you can put CustomerRequest in your details/case tab of your rule-application so it is available from the case manager portal if you prefer) .

Running that flow will give you a cover of class PegaSample-CustomerRequest from which you can use "add work" to add covered objects to the cover.

Sorry, I don't think in my 10 years at Pega I've ever used a "folder" instead of a "cover".  Hmmm, I wonder how folders are related to work lists or work baskets ?

/Eric