on one of our sharepoint site (office365/sharepoint online), limited-access user permission lockdown mode feature is enabled.
because of this feature enabled, users are unable to share the folder with others, getting below error message.
so, if we can disable/deactivate that feature they can share the folder.
from below post from official office site its saying even though you disable/deactivate that feature it won’t affect any other feature.
but again from the official microsoft site its saying when you deactivate this site collection feature.
other features such as publishing may require this feature to work correctly.
which is giving confusion.