The Effects folder contains multiple sub-folders for each main Effect category. Within each category folder, multiple Effect Settings files (.sfx extension) can be stored. This provides convenient categorization and grouping of Effects.
When creating and authoring Effects, you may decide to create your own categories. Simply create a folder within the Effects folder and save your Effects to that folder.
As the Effect Settings are stored within the .sfx file, you can exchange .sfx files with your friends to allow them to use the Effects you have created.