No, it isn't listing your folders in the No Context section, because folders don't have contexts and do not appear in the Context mode view.
Contexts are for everything but folders — projects, action groups, actions, and single action lists. You don't have to have a context assigned to anything, though the program works better for most people if actions get contexts. Contexts have two uses for action containers (projects, action groups, and single action lists):
- Provide a default context when creating new actions within the container
- Specify where the container will appear in Context mode view when contents are completed
The first case allows you to skip some typing if you have a bunch of actions that all have the same context. If you don't specify a context when creating an action nested within something else, the context of the parent will be given to the newly created action.
The second case is a bit more complicated. When you have a group of actions, and you complete the last one, you've got some choices to make. Are there more actions which should be added? Should the group be marked complete? Should the group be marked complete automatically? OmniFocus supports all three viewpoints. In the Inspector, there's a checkbox which allows specifying whether completing the contents of a group or project automatically marks the group complete. In the Preferences, there's a checkbox which allows specifying whether you want that other checkbox to be checked by default for newly created groups and projects. People who plan out their projects fully in advance might like the completion of the actions to complete the project automatically, whereas those who do not will want the opportunity to consider adding additional actions or completing. That's the background for the second case.
The general rule of thumb in OmniFocus is that one uses Project mode for planning (constructing projects), and Context mode for doing (choosing and executing individual actions). So what happens when you have a project XYZ with actions A, B, and C? Well, in Context mode, showing Available actions, you'll see action A. Complete it, and action B appears. Complete it, action C appears. Complete it, and now you are at the crossroads. If you've marked this project for automatic completion, OmniFocus does that for you and you're all done. If you haven't done so, it would be nice to know that you've run out of actions for that project, so that you can either complete it or add some more actions. This state is quite apparent if you are in Project mode, but not necessarily easy to see in Context mode, especially when you've got multiple projects contributing actions to the view. So, if you have the option to show Projects and Action Groups in Context mode (set at the bottom of the Data preferences in the OmniFocus preferences), OmniFocus will show you what appears to be a differently-styled action with the same name as the project or action group, and if you mark it complete, it is just as if you had switched to Project mode and completed it there. Now, here's the catch: where does that action show up in the Context view? It shows up in the context that you've assigned to it. Depending on your view settings, that may or may not be where you are looking when you complete that previous action. However, if you are looking at a view where you do see all of the remaining actions of that project, then when they are completed, you'll see the project itself pop into view. Containers are treated as not available until all of their contents are marked complete, so in a Next Action or Available action view, they are invisible until it is time to complete them or refill them. A Remaining action view will show them, but they'll be styled as unavailable.
Now, a lot of people don't make use of the second case, and that's fine. Using it does get you quicker notice that you've completed all the preplanned actions for a project or group (otherwise, you would only notice if you looked at the project in Project mode), and that's probably a good thing if you aren't doing some other systematic reviewing to bring the situation to your attention. If you choose not to use it, you may want to uncheck that option in the Preferences so that your No Contexts section only shows actions which don't yet have a context assigned (generally to be avoided, assuming you are using contexts in your practice).
I trust I've totally befuddled you by this point, but if not, let me know and I'll make it more complicated :-)