Hello.

This document type serves as container for other document types. I mean not every document type is a page you want to show on site. This document type helps you organize various document types in your content tree. Usually it is used as container for images, pdf’s or other files containing binary data.
Also, cms.folder is not shown in navigation (by default), so you can use it for data, you want to have on your site, but don’t want them to be visible on live site (in navigation web parts). And so on. Of course, if you don’t need or want this document type, you can delete it :)

Best Regards,
Radek Macalik