Syncrify client compare folders on the local machine with corresponding folder on the server to determine if it contain files that require backup. This is the default behavior and is done for every folder on the client machine.
When folder cache option is enabled, Syncrify creates a local cache file containing this list for comparison. This cached data is stored in a sub-folder called FolderCache off of the Data Folder.
As with every option, there are pros and cons: