Shellbags is an undocumented feature added in windows XP that allows per-folder settings to be saved. Things such as per-folder icon size, the item positions, (logical) view mode, fflags, etc are all stored in shellbags. This is also used under XP to store desktop display settings and icon positions, etc. (in a slightly different way than folders)
Some documents that relate to shellbags, can probably get some useful info:
related kb issue article:
Documentation of the functions implementing this:
Apparently it's also on MSDN now (Windows 7+):
Contains information pertaining to "bags":
There is also a function in Shell32.dll named "SHCreatePropertyBag", which we have a stub of.