For myself, the main reason I rarely bother with folders is that I tend to think of structural matters while I am writing, and thus build outline in reflection of the text that I am composing, rather than the other way around. If you work in that fashion, then there are very clear advantages to using text entries as the entirety of your outline:
Here we have a section from the user manual to use as an applied demonstration of what I mean. To be fair, with something like this you would more likely plan before you write, because you know you have X, Y and Z to cover. But for the sake of illustration, let’s presume I’m writing about something conceptual, i.e. the sort of thing where as you write, you realise more things you need to write about, or better ways to structure your thoughts (even if temporarily, and not a in way that will become the final document structure).
So I’m writing along in Interface in Overview, and as I do so, I have a sudden spark of inspiration that leads me down a train of thought whereby there would be two additional things to discuss that relate to this topic, The Project Window and View Modes.
Now at this point I could stop writing and switch over to the binder to do some restructuring. I would select the item I had been writing in and convert it to a folder, and then start adding the two items I thought of. It’s a perfectly fine way of working, don’t get me wrong.
Or I could do what I prefer to do, and mid-sentence hit the shortcut for the Outliner or Corkboard. Since I’ve just been typing away in text item thus far, I have a blank slate, I hit Return to add the new “lines” in my outline. When I’m done I hit the same shortcut to turn the view mode off, and I’m right back where I left off, cursor still blinking mid-sentence. I may not even lose my train of thought, because what I did is so efficient to how my mind works; done using the kind of keyboard-only typing “commands” that are familiar to the act of writing say, a bullet list. Only my bullet list isn’t in the paragraph below where I was writing, but two new outline elements tucked away and waiting for me to expand upon.
While the differences between the two approaches may seem subtle on paper, I would say that the cognitive differences are stronger. The method of switching to a different area of the project window and building nested structure and converting outline item types feels to me more like management to me, and less like writing.
Outlining on the other hand, right in the same area you use to write, using keys you would use to write (like Return), feels more organic and less disruptive—it feels like a natural extension of the writing process itself. I’m not grappling for the mouse and aiming at little targets on the screen and right-clicking to convert to a folder. I’m not dragging items around to nest them, or maybe even having to scroll the binder to the right place to begin all of this. I’m just writing, and I’m not festering over what “kind” of thing is left behind as I do so. For me all such excursions result in text entries, and thus all structure is comprised of text entries. There is no going back and fixing things, no changing things for the sake of protocol. If I later go and nest five topics into a previous text entry, I’m done, that’s all I have to do. I don’t have to right-click and change the new parent item into a folder.