The directory section provides thumbnails of your public apps so that people can click on the thumbnail and be taken to that app. This is sort of like a master index of your apps. You can create your "portfolio" app that you can share with your clients and they can see a set of public apps.
You have two display options... flat (the default) or tree view. In flat, all your public apps are displayed immediately regardless of what folder they are in. For tree view, any apps inside a folder, will not be initially displayed. Instead a folder icon will appear and that must be clicked in order to see the apps (or folders) inside of it.
You mark apps public by right clicking on them in the navigator section of the builder and selecting to make them public. They will then have an eye icon next to them to show you that it is public.
As you mark public apps, the directory section will automatically include them so you do not need to publish your "portfolio app" again when you add new public apps.
The directory section only works when the mobile device is online.