There are three types of sharing modes available in the Documents tab.
Private - Documents and files are private by default upon creation or upload. They are only visible to the user who created or uploaded it.
Public - By making a document or file public, it is made available to all project members. Public items will not have the option to Share with members since it is available for viewing by all project members.
Sharing with specific project members - By selecting Share option, a popup with potential members will be shown. This popup lists active project members whom you can add and share the document or file.
The user will need view permissions in documents to view document section entities, and they will need edit permissions to create, edit and upload to the documents section. Depending on the settings of a user's project permissions, they may be able to view all documents and folders, or just a subset of them. The same is true for viewing the list of project members to share files - a user may be able to view all project members or just a subset. Contact a project owner for user permissions.
Folders are public entities, as well as any entities marked as public. Entities specifically shared to a member will be viewable to them.