Folder permissions control file system access, while subfolder permissions specify different rules within a folder hierarchy. File systems use inheritance, where permissions from a parent folder automatically apply to its contents. Setting unique permissions for a subfolder involves explicitly overriding this inheritance. This allows fine-grained access control tailored to specific needs without altering the parent folder's settings.

For example, an IT admin might grant a project team 'Modify' access to a main project folder containing various subfolders, but restrict the 'Budget' subfolder to 'Read-only' access for most members, granting only managers full control. Similarly, in cloud storage platforms like SharePoint or Dropbox Business, you can configure unique permissions for a sensitive subfolder like 'HR Documents', preventing unauthorized access from users with broader access to the main site. File servers and most collaboration platforms provide admin interfaces or CLI tools for this purpose.

While offering precise security control, managing unique subfolder permissions can become complex as hierarchies deepen, increasing administration overhead. Misconfiguration risks granting unintended access or locking out legitimate users. The principle of least privilege should guide settings to avoid security holes. Future tools may increasingly automate permission auditing to mitigate these risks, though explicit settings remain essential for specific security requirements.