I am new to this field and I watched many simulation of AES. I'm curious on how exactly AES encrypts/decrypts OS folders?
AES is a standard for encrypting/decrypting data. It doesn't specify how folders and files will be represented after encrypting them, so different crypto software may represent folders differently and is entirely up to the software you use to decide how to do it.
One method of how a crypto software will represent folders inside a single encrypted file would be a file achiever i.e. tarball format (.tar), it could also be combined with gzip to compress the archive before encrypting it.
I'm not saying crypto software does this, just that this is ONE method for how a crypto software 'could' represent files/folders if that what you're asking and has nothing to do with AES itself.