No, they're not made up. A folder (or directory) is a specific type of inode, just a file is.

S3 doesn't have folders. The UI fakes them by creating a 0-byte object (or file, if you will). It's a kludge.

Directories actually exist on the filesystem, which is why you have to create them before use and they can exist and be empty. They don't exist in S3 and neither of those properties do, either. Similarly, common filesystem operations on directories (like efficiently renaming them, and thus the files under them) are not possible in S3.

Of course it can still be useful to group objects in the S3 UI, but it would probably be better to use some kind of prefix-centric UI rather than reusing the folder metaphor when it doesn't match the paradigm people are used to.