Why is it called Virtual Folders?
Virtual folders only exist in SSMS. Nothing changes on your SQL Server.
Nothing is changing in your SQL Server or in your databases, tables, views, procedures, ….
Only the AddIn knows of the existence of the folders and pass them through to SQL Server Management Studio in order to display the folders.
That is why we call them Virtual Folders. They only exist in memory during your SQL Server Management Studio session. To persist them we store them in a table on a SQL Server of your choice.