Changing from earlier use, the 'favorites' folder is used to provide a stationery file (see below) type of service for any file in that folder.
The 'favorites' folder name is case sensitive and is found at
TBX files or aliases of TBX files placed in the folder are automatically added to the File menu's 'Open Favorites…' sub-menu. Items remain listed in the menu until removed from the folder. This ensures such files are always available whether recently used or not. By placing aliases in this folder rather than the TBX file itself, the TBX can be kept in a more obvious location (such as within the /Documents/ folder hierarchy). A Mac alias can even track the file if moved around the same disk.
Files opened from this folder are opened as unsaved copies of the source file and given the name 'untitled.tbx'. This simulates the old Mac stationery file behaviour.
Unlike in older versions (pre v6?) of Tinderbox, the 'favorites' folder cannot be used to store (or alias) files you wish to edit directly.
To make it easier for the general Mac user to access Tinderbox's support folders, the Help menu's 'Reveal Support Folder in Finder' option will open the folder in a new finder window.
What are stationery files and why the change in Tinderbox behaviour?
The Mac's notion of a 'stationery file' is one that acts like a stationery pad: for a fresh copy you take the top item, i.e. the file acts as a template. Thus files that are set in the OS as stationery files (via a tick box on the their Finder/Get Info dialog), will open an unsaved copy of the file with an 'untitled' filename.
This OS behaviour exists (as at macOS 10.15.1) when manually opening such a file in Finder. However, the API allowing programatic creation of a copy a stationery file has been deprecated and cannot be relied upon its use.
Thus current Tinderbox behaviour is to treat all files in the folder as if they were stationery files regardless of the actual OS setting.