alt Hacker NewsThere's an associated video on youtube somewhere, but no it doesn't do that. you're close, though.
if you drill down into the right folders, it contains every possible text file up to a certain size. He uses a weird 70 character encoding scheme in order to optimize folder depth and width (he didn't want more than 5k objects in any folder) and to stay within maximum path length limitations.
it generates the text files on demand based on the path you're following and in each folder (along with other folders) is the text file represented by that path so far.
Here's the video: https://www.youtube.com/watch?v=w6rkhvdAqHU - This Flash Drive has Literally Every File
The contents of the file are based on the path used to access it, correct. It uses MTP rather than emulating a normal flash drive though, which makes this kind of project much easier.
They also suggest that you can do other things using the same technique, like hiding a folder unless you know its exact name, only showing files if you navigate to certain other folders first, or because the esp32 stick being used contains a screen it could run a copy of doom controlled by navigating through folders.