Photos Albums vs Folders
What is the relationship between Albums and Folders? Is the folder the master file, with any number of albums inside? Or, the other way around?
MacBook Pro 13", macOS 10.13
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Folders do not hold photographs.
They can contain other (or nested) folders. Within folders you can have Albums.
So: Folder called 'Holidays' might contain a nested folder for each Year - 2020, 2019, 2018. And within each folder you could have albums for major Holiday events from that year.
Only albums can contain photographs. If you create a new, empty folder and then drag a photograph to it, it will automatically create an album within the folder, containing the image.
So the relationship between Folders and Albums is that folders can help you group albums together. That's all.
As for concepts like 'master file': there really isn't any in the Photos Window. It's a library. Every photograph is in the library. Albums contain pointers to the library. So, an image can be in 50 albums and use no extra disk space. Delete an image from an Album and it is removed from the Album. Delete it from the Library and it's removed from all the Albums that contain it.