After thinking about it and double checking, I believe you're screenshot looks exactly like the phone Settings > Locations, which controls whether the phone's physical location is accessible to apps or not.
Since I don't keep a map app in my Secure Folder, the "Location for Secure Folder" is greyed out for me. So I strongly suspect that setting is to provide the phone's location so that apps in Secure Folder like your map app can work.
Update: I double checked on my phone, and found that the "Location for Secure Folder" only greys out when you turn off the phone's location. That said, it is well documented that any options in phone Settings > Location are settings to control what can access the phone's physical location and how. So, even if it is never mentioned that Secure Folder is associated with the phone's location, it is highly likely it's a setting in there because it can have apps that may need access to the location data.
That would seem that way. I guess this would be one way to turn off location for all apps within Secure Folder despite each app in the inside would have their own location permission/setting.
Though, if that were true, it would have made more sense to put the switch inside Secure Folder's app settings instead. It does seem that the people in Samsung rather view Secure Folder as a feature of One UI than a separate app (just like Galaxy Buds).
