Local View can optionally contain a separate pane for the local directory structure. By default, the Local Folder View pane is hidden. You can show and hide it again by clicking the Show/Hide Local Folders button on the File bar.
The directory structure is presented as a tree-like folder structure. You can click on a folder to view its contents on the right-hand side pane of Local View. The displayed folder is highlighted in the folder view.
Opening or closing a folder in the folder view does not affect the file view on the right-hand side, unless you close the parent folder of the displayed folder. In that case the closed folder becomes the new displayed folder.