Q. Is this really as harmful as you think?
A. Go to your parents house, your grandparents house etc and look at their Windows PC, look at the installed software in the past year, and try to use the device. Run some antivirus scans. There’s no way this implementation doesn’t end in tears — there’s a reason there’s a trillion dollar security industry, and that most problems revolve around malware and endpoints.
Someone going into the subject may not have any pre-existing knowledge of the subject (like what a tree is) and may be intending to learn it from their classes. Unless we require everyone to take a class that covers it first, you can’t really guarantee that people have that knowledge. While people may have known it by necessity before, computers, for better or worse, have gotten easier to use for the average person and it’s no longer essential knowledge. Or they may not have even be using a traditional desktop/laptop OS that has those concepts.
As for how it’s confusing, have you seen the default UI for Google Docs/Sheets/Drive or Microsoft Office recently? Google’s products default to a file view listed in most recently used order with a search bar at the top, no folders. The Microsoft Office suite defaults to saving to OneDrive without any folders. If this is all people have needed to use when growing up, is it any wonder why they never learned about hierarchical folders in a filesystem?