The advantage of using Multi-Level Directories You can select the option to have the BOX directory to be in a multi-level format. If the mailbox directory root is C:\BOX, then the mailbox directory for the mailbox fred will be C:\BOX\fred\ However, if an extremely large number of mailbox directories exist at the same level of the file system, mail access can become less efficient and performance can be affected. When a domain uses this option, MailSite will use the first three letters of the mailbox name (each following an exclamation mark) to construct a three-level directory path. For example, if the mailbox directory root is C:\BOX, then the multi-level mailbox directory for fred will be at C:\BOX\!f\!r\!e\fred.

The reason the increased performance is that MailSite does not have to traverse through a large NT file system directory if it is sorted in multi directory format.

When selecting this option within the Domain properties, it is important to note that the existing BOX directory will not be converted automatically. This will need to be done using the MSCVTDIR utility.

References & Resources:
MailSite Administration Guide - Utilities Appendix MSCVTDIR (page 216)
MailSite Administration Guide - Domain General Page (page 151)