Universal Media Server | Forum

Can someone explain what they are and what they do for me?

Apart from the normal directory structure that you expose as you have configured it, once enabled you will also find a #LIVE SUBTITLES# folder.
In this folder you will find (based on your subtitle preference settings) your regular movies that you expect enhanced with subtitles that are retrieved from the internet 'on-the-fly'.
So if you did not have the subtitle file yet, it will save you the hassle of retrieving it from the internet separately, renaming the .srt file to the name of your actual movie and placing it in the same directory.

Oh... thought it would let me add and edit subtitles while playing.

naming seems a bit off.