Xcode add files and create groups

Hi all, I think I understand the difference between these two folders options: http://d.pr/iw69

My question is, when I select "Create groups for any added folders" and upload a directory containing other sub-directories and files, how come it copies straight my directory in my project filesystem with all the structure? It should not just copies all the files at the root? Because even if I move the files in my xcode groups, they are not moved in the filesystem neither.

Also, how come when I add a directory with files in it and check 'Create groups for any added folders', if I delete it, it keeps the empty directory in my project filesystem?

If you have some Apple documentation on this topic, feel free to link me! I could not find it:)

Thanks!

Message was edited by: allaire