Folder creation directly on file server

Pre-sales question - if we have a root setup with a path on the local file/web server
if we create sub-folders directly in Windows folder, will it automatically populate in the Root Folder on the web interface? and how the permission works on those sub folders just inherit from parent?

Yes, by default all subfolders inherit from the root folder unless you explicitly change permissions for a subfolder on "Edit Root Folder" dialog.