A tiddlywiki file is a self-contained, single tiddlywiki. A tiddlywiki folder is a file folder (sometimes called a data folder) with sub-folders and configuration files that enables it to run with node.js. The individual tiddlers are stored as separate files on the disk. The folder approach is handy if you're working on a github project and only want to synchronize tiddlers that have change, or if you're using a service like dropbox and want to minimize bandwidth. However, the last time I checked, the problem with data folders on TD is that if you open a folder, and then close it, you can't open it again until you close down tiddly desktop completely, including any other tw files or folders.