Restricted folders are subfolders of shared parent folders. Only people that have been specifically been granted access to a restricted folder are able to access that folder and its contents, even if other people have access to the shared parent folder. Restricted folders, though restricted in access, are visible to those that have access to the shared parent folder.
Creating a restricted folder
Within a shared parent folder, click on the compose menu in the upper right corner (the little pencil), then select "New Folder." The subfolder will initially be shared with everyone in the parent folder.
From the new subfolder, click on the Share menu, then select Advanced Options...
...then select Restrict Folder.
Add the people that you want to share the folder with (they don't necessarily have to be people with access to the parent folder), and then click “Save.”
You'll be asked to confirm that you do, indeed, want to restrict access to the folder. Once you do, a lock icon will appear on the folder to indicate that it's restricted.
Unrestricting a folder
To restore access to everyone in the parent folder, click on the Share menu in the restricted folder and then click “Unlock Folder”. This will open the subfolder to everyone on the parent folder, as well as anyone else you've specifically shared the subfolder with.