Magic Folders lets you create up to five different accounts (this can be increased - see http://pc-magic.com/mfxlic.htm for details). Each accounts' magic folders are invisible to the others. In this way each user of your computer, or member of the family, can have their own magic folders. You could also use this feature to group similar files together so that working on one group doesn't expose the others. For example, one account for financial data, one for business, one for personal documents, etc..
Unlike Windows, Magic Folders doesn't implement a hierarchy of privilege where higher privileged users have access to all files accessed by lower priveleged users. The Master account cannot see the files hidden by the other accounts . All accounts are mutually exclusive. Therefore, if you create multiple accounts you can't make all files on the computer visible at one time without uninstalling Magic Folders. Remember this when making backups.
Only the master account can create new accounts. This doesn't mean however that the master account has access to all accounts. Each account can change its password. Let's say you want to give your spouse a private account. You'd select "Accounts/Create New Account" and create the new account password. You'd then tell your spouse the password you used to establish the account and he/she would enter Magic Folders using that password, select "Accounts/Change Your Password". Now they have their own account, with a password only they know.
The Master Account can use the Recovery Password to get access to the Master Account should he/she forget their password.
If any account other than the master account forgets their password then they can supply the Master Account holder with the name of one of their hidden folders and the Master Account can then use that info to reset their password. To do this the Master Account should select "Accounts/Recover password of another account" on the Menu bar.