@srcurtis thank you for your feedback.
The error with creating a folder on the remote is fixed in the latest preview update available at https://www.devsense.com/en/download .
The main reason for the new implementation is, that there is A new project system (Visual Studio 2019 and newer) that has always all the files in the project folder listed in your Solution Explorer whilst the old one sometimes missed files added outside the Visual Studio. Also, Remote Explorer simplifies excluding whole folders and provides a preview of local changes similar to other source control tools.
Although; as you suggested, it would be reasonable to implicitly exclude files that are not included in the PHP project.
I hope it helps. We'll keep working on the remote explorer based on all the feedback we get. Next, we are going to merge the remaining features in there.