Earlier quoted context omitted.
Dropbox has a website? (Yes I knew Dropbox had a website. I'm speaking for all those users who downloaded it once and now use it to synchronize their computers, never realizing there is a website too. And yes, these people do use the public folders: they right click & send the link to someone, but don't connect that to the idea they can see their own files on the web)
I have helped a computerphobe (hates computers and Internet, clueless, but must use them) with Dropbox. She gets that her folders on various computers around town are synchronized. I had a very difficult time explaining to her that her same folders and files are available via the web interface. Those people are out there.
I'm always espousing the necessity of backups to my friends/family, which means I've usually got the role of setting up a Dropbox account for someone without a technical background.
When I say that their "My Documents" folder is a level above their Dropbox folder, I get a blank stare. While many users can create folders and somewhat organize their data, to most non-experienced users I've encountered, the mental image of a hierarchy of data segmented into directories is not represented clearly enough by the GUI's of modern operating systems.
When people hear the word "folder" and see the folder icon, they don't think of it (the way we do) as a metaphysical representation of the overall directory tree. They simply think of a folder on a desk. A folder on a desk is not usually inside another folder. It's usually just sitting there. So a user without knowledge of the tree/hierarchy model just sees various sets of folders, not a set of folders within other folders. Therefore getting things into their Dropbox is an exercise of mental visualization that takes time and explanation.
Further, once I've somewhat explained this concept, I usually leave it there and tell them that "the green checkmark means you're backed up." The web interface is a whole new exercise in visualization that is quite a bit more difficult to pick up. Even after I tell people that "your data is synced to the web interface," they don't initially understand what that entails, and believe the web interface is separate from the files they've "backed up" on "their Dropbox" (the local Dropbox folder.)
My girlfriend (A/B test subject #1) is used to using the "upload" button on the Dropbox web interface because for a good while she didn't realize things on her local folder would sync to the web interface. She's also not entirely comfortable with the hierarchy model, and the "upload" model is in fact easier for her to understand.
Reminds me of the SJ quote from an AllthingsD conference where he says every usability test hits a wall when the user encounters the filesystem. I've seen this evidenced again and again.