Selecting a local storage folder is optional - only do that if it benefits your workflow in some way, otherwise using the default storage location for MobileSheets is fine. As far as Dropbox, yes, select an empty folder to sync to. As mentioned previously, if you want to manually synchronize changes between your devices, you can certainly do that so long as "Expose Database" is checked on the Android device, but then I would recommend using the default folder on Windows (C:\Users\<your username>\AppData\Local\Packages\41730Zubersoft.MobileSheets_ys1c8ct2g6ypr\LocalState) because the mobilesheets.db file is managed there, so you would have to manually copy the database file to that folder each time otherwise.
Mike
Mike