In fewer words, local access for folders is utterly nerfed. Edit: See the 'Interesting side effects' section above for more info.

On the web, it's clear that they're still the owner, but locally, that doesn't matters very little because the file now belongs to another structure.

It's only accessible from that dang folder shortcut. But when the changes sync locally to their computer, that file, which was on their machine, is gone, poof, deleted. also has to go to the Drive website to move a Drive file that they own into that shared folder.has to go to the Drive website to move a local file from their computer into the shared folder - they can't do it from their file browser, which was possible before.has to manually download any non-Google-type file every time to view it or edit it, then upload it again (Google-type files are unaffected because they get edited live).can't have the files inside the folder sync automatically in the background to their computer, so they don't have easy access to the latest version.needs to be online to see what's inside the folder and which modifications other users have made.Any changes I made were synced once I came back online. Just to be sure, I turned off internet access, and opened the file. I then opened the Drive folder on my PC and saw that the file was fully synced, not as a shortcut, but in its entirety. From Google Drive web, I created a shortcut for that file in my Drive. Say someone shared with me a 'Shared Excel.xlsx' file. The last point needs to be further clarified because it surprised me. The former require you to be online regardless if it's a proper file or a shortcut, and the latter get synced even if they're shortcuts. With shortcuts, Google-type files (like Google Docs, Sheets, Slides) and non-Google-type files are both unaffected when syncing locally. If you have a PC or Mac, you probably use Google's Backup and Sync to make some or all of your Drive directly accessible from your file browser. Now think of those files and folders that you choose to sync locally to your computer.

Google drive sync shared folders