1. SharePoint folders have advantages like user adoption due to familiarity and ability to set permissions at the folder level. However, folders have disadvantages such as inflexible views, inability to sort or filter, and risk of documents getting lost in nested structures. 2. Metadata allows for more flexible views through sorting and filtering and ability to tag documents with multiple values, but users may have difficulty adopting metadata practices. 3. The document provides recommendations on when to use folders versus metadata based on specific requirements like being able to classify documents in multiple categories or control classification structures.