Folders mode instead of manually formed list of files uses content of locally existing folders on your computer for this.
Folders mode its not the same like auto-adding all files to playlist:
You can switch your playlist to folders mode by pressing F11 or using pop-up menu of
button.Also, in pop-up menu you can find "Sync positions in playlists", this option forces a player to open folder of current playing file first. And when you switch back to simple mode, this option ensures playlist will have a file that currently playing.
If you need some fine-tuning for Folders mode, you can do it with popup menu.
When working with Folders mode you can use these hotkeys: