When you enter frequencies, trunking systems, talk groups, etc., you're entering them into the PSR-500's "working memory". The working memory is what's used (and the ONLY thing that's used) when you browse through your programmed objects in MAN or PGM mode, scan them in SCAN mode, etc. Working memory holds all of the GLOB settings, Weather settings, and all objects (CONV, TSYS, TGRP, SRCH, SWPR).
A "V-Folder" is a copy of that working memory. It's stored in a special area in the radio, and is not accessible to the MAN, PGM, and SCAN modes. The V-Scanner Folders allow you to have 21 different copies of working memory. When you want to edit the contents of a V-Folder, you must "Load" it into working memory first. When you want to "scan" a V-Folder, you must "Load" it into working memory first. Only one V-Folder can be "active" at a time, since there's only one "working memory" and a V-Folder must be in working memory before you can do anything with it.
When you hit FUNC + PGM, you have the ability to load from a V-Folder into working memory, save working memory to a V-Folder, or clear the contents of a V-Folder. There is no way to "edit" or "scan" a V-Folder directly - only working memory can be viewed, edited, or scanned.
You can think of V-Folders as 21 files on a hard disk. The PSR-500's "working memory" would be like the program used to open those files. While they're sitting there as files, you can't do anything with them. You have to load them into the program ("load V-Folder to working memory") in order to view their contents, edit them, print them, etc. If you want to keep any changes, you would save them from that program back to the hard disk ("store working memory back to a V-Folder").