My theory is that the logic behind such claims is that you can effectively map all groups of folders' entries using tags derived from every file's original fold

My theory is that the logic behind such claims is that you can effectively map all groups of folders' entries using tags derived from every file's original folder hierarchy, but representing all the possible groups of tagged files in a hierarchical folder system requires an incredibly fragile and complex system of symbolic links. Ignoring certain issues with converting folder names to tags (such as two identically-named folders nested in the same path and collisions between tag combinations whose paths are a different order of the same set of folder names), an ideal tagging system is as expressive as any hierarchical organization and it is capable of numerous additional ways to slice the data. In practice, tagging systems seem to be limited by relatively immature interaction models relative to the far better explored nested structures. For example: for a given folder in the hierarchy there are often few enough children to allow easy recognition of a forgotten name whereas tags for non-empty subsets of a given set of files are hard to suggest meaningfully; nested folders demand more care beginning with the earliest placement of files but tagging makes wholly unsustainable conventions perfectly reasonable early on; sections of nested structures are easy to relocate to a new parent but changing the related set of tagged files to uniformly substitute comparable target labels for precisely those obsolete labels is difficult or impossible. In short, there's a theoretical basis for replacing folders with tags, but the real-world adoption is severely hampered by grossly incomplete UIs for many needs previously met by nested folders.