Say user 1 has a large screen, and sizes the window of a folder accordingly, keeping spacing of icons in it large. Next, user 2 opens the folder on their desktop. Firstly, should it disappear from user 1’s screen, as it would if it were a physical object?
That probably is undesirable.
Also, if the window doesn’t fit on user 2’s screen, what should the UI do? Resize the window? On user 2’s screen or on both screens? If user 2 changes the looks of the window, and user 1 opens it again, should user 1 see it the way user 2 left it behind?
Access rights introduce other problems with this metaphor. What should happen if user 2 doesn’t have write rights to a networked folder? Should they be allowed to move icons within a folder? Change window sizes? If so, where should the information about icon layout be stored?
Those physical folders also don’t work well with disks with millions of files.