I know this obvious, but I have not found an official statement/document on these folder settings. We struggle with the permission on a group vs. folder and often un-do the intention of the group.
You can find folder settings documentation at https://docs.adobe.com/docs/en/aem/6-2/author/assets/managing-assets-touch-ui/private-folder.html
I have updated documentation team to add more details regarding roles and permissions in folder settings documentation.
However, you can find detailed documentation for user and groups permissions at https://docs.adobe.com/docs/en/aem/6-2/administer/security/user-group-ac-admin.html