Mess in Permissions for folders in SharePoint

Hello all,

I'm getting really frustrated about how SharePoint assign permissions to users... 

I am migrating 2 Shared Google Drives to SharePoint and I'm confused what is going on with permissions.

I have set permissions to main folders as below - Direct Access:

• Folder 1 - owners, members have access
• Folder 2 - owners have access, I've deleted Memebers and added only specific users from Member list with access to Folder 2.

However, when I check ADVANCED settings for subfolders in Folder 2, I see a message that "There are limited access users on this site. Users may have limited access if an item or document under the site has been shared with them". When I click "Show users", I see that MEMBERS group is there and when I check for permission for a user that is part of MEMBERS but should not have access as I removed MEMBERS from parent folder, it shows that that user has a limited access...

I just dont understand what is going on.... I do not want to go through 2000 folders and check permissions manually for each 😕 

I also see lots of "Delete unique permission" option in Advanced.... Not sure why it is creating unique permissions... and also why it adds MEMBERS group as OWNER to many folders.

A question - when I add user via "Direct Access", is it required that that user is part of that site MEMBERS group? Or could be any user within O365