The “External Folders” section allows you to edit text files which do not reside within Ulysses for several possible reasons. The following (incomplete) list should give you an impression how versatile this section can be used:
When working in external folders, Ulysses lets you choose between two file formats – Markdown and our own file format. By default, Markdown is selected to ensure the highest-possible cross-app compatibility. However, if you store your sheets as Markdown files there are a few constraints you should know about:
These restrictions are gone when you decide to opt for Ulysses’ own file format: All you have to do is disable “Read and Write Markdown files” in the folder settings and the app will start using Ulysses files for any newly created sheets. Existing Markdown files will not be converted automatically and will not show up in the external folder anymore.