Yeah, it basically maintains Finder window state.

One thing I've wondered is if this method still makes sense on modern hardware compared to keeping all that information in a centralized sqlite file or something along those lines. I could see individual files being advantageous on a slow mechanical HD where seeking through a file that could eventually grow large might pose issues, but that shouldn't be a problem on an SSD.

The main advantage I can think of that might still be relevant today is that it makes Finder window state machine-independent, so when you open a folder on two different machines it'll still open in list mode sorted by Date Modified or whatever.