One of the things Apple has been very keen on since the original Macintosh is the idea of making technology less complicated.
By making things simpler and more streamlined, and decreasing complexity (sometimes – although not always – at the expense of very direct control), Apple has honed user experiences that have taken the industry in new directions.
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Nowhere is this clearer than in file and media management. Take a terrifying trip back to the distant past (well, the early 80s), and file systems were all about making you work with command lines. Apple obliterated this with Mac OS, encouraging a pointer-driven desktop metaphor that still exists in OS X and rival operating systems.
However, with the huge number of files users juggle today, the drag-and-drop file system has become unwieldy, forcing users to spend hours filing documents, and then rifling back through nested folders to unearth them at a later date.
In the Spotlight
With OS X 10.4, Apple introduced Spotlight, its first blow against the traditional file system. The idea with Spotlight is that you use a search term to find what you want, and the list of suggested items dynamically updates as you amend your term. In many cases, this renders the file system obsolete.
And with Spotlight also came the ability to save and edit searches, based on user-defined criteria, as smart folders.
Smart folders in Finder are actually a type of virtual folder, a concept first fully championed by the innovative BeOS, but that's since been taken on wholesale by Apple. Prior to Spotlight's arrival, Apple had trialled the concept in iTunes (as smart playlists) and iPhoto (as smart albums), but it's now integrated directly into Finder, along with Mail (as smart mailboxes) and Address Book (as smart groups).
Although there are variations in the way virtual folders work in these apps, it's important to understand that they are a relatively generic concept. In the same way that you don't re-learn how to cut, copy and paste in different applications, don't think you have to start from scratch when you've mastered virtual folders in iTunes and then move to iPhoto or Mail.
There are common themes with virtual folders. You create and name the container, and then use one or more conditions and values to define what the container provides access to, regardless of where the items are stored on your Mac (or the library of an application, in the likes of iPhoto). Depending on your wishes, you can set the container to include items that match all or any defined conditions. (iTunes goes further, providing the potential for more complex logic via nested groups of conditions.)
Containers can be edited later, so you can update conditions when needed. Also remember that virtual folders really are virtual – if you delete a smart folder in Finder or a smart album in iPhoto, the items that were in it are unaffected.
How to effectively use virtual folders
1. Smart playlists in iTunes
iTunes offers the most powerful implementation of virtual folders in Mac OS X, enabling you to nest groups of rules. Create a smart playlist via File > New Smart Playlist (or Option+Command+N).
In the Smart Playlist window, select a criterion from the left-most menu and add values using the second menu and the field. Use the + button to add extra rules. Rules can be deleted using the – button, although there's no undo. Create nested rule sets using the … button. Use all or any match menu item(s) to determine whether results depend on all or any conditions being met.
For example, set Artist is [The Beatles] and Date Added is in the last  months; all then returns Beatles tracks added in the past year, but any returns all Beatles tracks and all tracks by other artists added over the past 12 months.
Good uses for smart playlists include returning dynamic lists of highly rated tracks, those you've not heard recently, those you've recently added, or a combination of these things. To edit an existing smart playlist, select it in the iTunes sidebar and go to File > Edit Smart Playlist.
2. Smart groups in Address Book
In Address Book, File > New Smart Group (or Option+Command+N) starts the process. Conditions are based on fields within a card, including notes; if you're a member of a football team, you could add [football team] to the Notes section of relevant contacts, and then create a smart group with the condition Note contains [football team].
If you check Highlight group when updated, groups are highlighted in the Address Book sidebar when changes occur. To edit a selected smart group, go to Edit > Edit Smart Group. Since Address Book integrates with other OS X applications, you can type a smart group name into iCal or Mail, and the application will automatically replace it with the members of the group.
3. Smart albums in iPhoto
File > New Smart Album (or Option+Command+N) creates a smart album, and conditions are defined in a sheet. With iPhoto, conditions can be based around tags applied to photos (manually or automatically), including description, date, face, keyword and rating. There are also hardware based options.
You can set up date-based smart albums (Date is in the last  months), an album of iPhone pictures (Camera model is [Apple iPhone 4]), or a smart album of your imported iOS device videos (Keyword contains [movie]). To edit a selected smart album, go to File > Edit Smart Album.
4. Smart mailboxes in Mail
If you get lots of email, Mail's smart mailboxes are invaluable. Mailbox > New Smart Mailbox gets things started, and conditions similar to iPhoto. Checkboxes towards the bottom of the sheet enable you to toggle the inclusion of messages from Trash and Sent. Mailbox > Edit Smart Mailbox enables you to edit a smart mailbox.
Good ideas for smart mailboxes include: creating a repository for unread mail (Message is Unread and Message is not in Mailbox Junk); date-based collections (such as Date Received is in the last  Days); and overlooked emails (Message is in Mailbox Inbox and Date Received is not in the last  Days).
5. Smart folders in Finder
Creating virtual folders in Finder differs from other applications. After going to File > New Smart Folder (or Option+Command+N), a new Finder window opens. You then define conditions in the window.
To add keywords, type them in the search field. By default, few criteria are available, but you can access more via the Other… option in the search attribute menu; you can also check In Menu checkboxes in the selection sheet so your favourite attributes will show up in future. Click Save to save your smart folder.
By default, they live in /Library/Saved Searches and the Add To Sidebar option adds them to Finder sidebars for easy access. To edit a smart folder, open it in Finder and select Show Search Criteria from the Action menu (the one with the cog icon).