if you drill down into the right folders, it contains every possible text file up to a certain size. He uses a weird 70 character encoding scheme in order to optimize folder depth and width (he didn't want more than 5k objects in any folder) and to stay within maximum path length limitations.
it generates the text files on demand based on the path you're following and in each folder (along with other folders) is the text file represented by that path so far.
The contents of the file are based on the path used to access it, correct. It uses MTP rather than emulating a normal flash drive though, which makes this kind of project much easier.
They also suggest that you can do other things using the same technique, like hiding a folder unless you know its exact name, only showing files if you navigate to certain other folders first, or because the esp32 stick being used contains a screen it could run a copy of doom controlled by navigating through folders.
Each folder represents the file content so far. So how to find a specific file without knowing its contents - by its title for example?
you get to any file by following the filesystem path whose bytes match the content you are looking for. There's no searching for the content you want.
if you're crawling the filesystem it will probably take you until the heat death of the universe to complete that crawl.
I might have a go writing something like this for my Mac.