The FolderViewer is a very unique tool. What it basically does is take a particular Caravel folder and display it as any type of list or group. For example, if you have a folder full of pictures, then the FolderViewer can take that folder and generate a gallery from it. Furthermore, you can specify what happens when a particular item in the list is clicked on. You can make it display that particular item in a popup, in a new page, or any block on the current page. The FolderViewer can make a folder into a gallery, a blog, a list of downloads, or something entirely different.
To add a FolderViewer move your mouse to the plus icon on a column and click on the "Open Folder" link.