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.
To create a restricted folder:
Within a shared parent folder, click on the + icon and create a new subfolder. The subfolder will initially be shared with everyone in the parent folder.
Within the new subfolder, click on the gear icon.
Click on “Advanced Options.”
Click on “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 will then get a “Lock Folder” dialog to confirm that you would like to restrict access to this folder. Click “Lock Access.”
There will now be a lock icon on this folder to indicate that it is a Restricted Folder.
To unlock the restricted folder, click on the icon and then click “Unlock”. This will open the subfolder to all of the people that the parent folder is shared with, as well as anyone else you've specifically shared the subfolder with.