[ocelotpotpie]

(Disclaimer: I'm on the Paper team, and Paper is the org under which Folia sits)

AgentK20 explained the technical bits along with the other reply to you, but basically the "actually all in one world" is the big part. For sharding you're handing players off to different instances. With Folia someone can just walk from one person to another without any issue or lag.

Folia dynamically groups people into regions depending on their distance. So it was designed to have people spread out to be able to support many regions across many threads. You can put 1000 people in one spot, it just gets very unhappy and you're now not really taking advantage of the whole point of Folia.

It's not a solution for every server or person but it's definitely cool because it's another tool in the Minecraft tool box. And the API is very similar to Paper, whereas the sharded options start to get kinda tricky quickly.