Why stretch and fold vs traditional kneading of bread dough?
The purpose of all kneading techniques is the same: as @rumtscho wrote, to stretch and align strands of gluten.

The traditional kneading method is to fold the mass of dough on itself, press it together with the palm of the hand, turn, and repeat.

With very high hydration doughs this is impossible because the dough will hopelessly adhere to the hands. The technique is, therefore, modified to reduce hand contact with the dough as much as possible.

A dough scraper is used to gather and fold the dough which is laid over on itself instead of being pressed. The result is the same as normal kneading but only the fingertips come in contact with the dough. After just a few turns the gluten sheets will align and the dough will still be tender but much less sticky.

As for why it seems more effective I can only conjecture. Gluten forms in the presence of water. Higher hydration doughs allow for faster gluten development. It is not that the folding is more effective but that kneading very wet doughs progresses faster.