What does it mean when the Mac shows a shared folder (named a PC) in the Finder sidebar?
No - Finder shows you other servers / file shares so think of this like a directory of other computers to knock on their doors to ask if any files are being shared.

Your Mac controls sharing from the system preferences pane. By default, file sharing is off and if you turn it on, your password and user account is needed on the remote computer to look at any of your shared files.

Yes - you are correct that the preferences just hides those other computers from your view - that computer is still on the network and still "advertising" that it might be sharing files.



The PC above is actually a HP printer/scanner that has a slot for a SD card to be read. The rest are Apple computers with file sharing or screen sharing enabled. Those wouldn't show up if the sharing system preference was turned off for all the potential items to be shared.

Technically - the PC icon indicates SMB sharing of a printer or file share and/or possibly VNC screen sharing. Mac computers sharing a screen or file share shows up with Mac specific icons.