The screenshots confirm that this work will bring the rest of the File Explorer interface in line with other modern interfaces found on Windows 11, which will go a long way in making Windows 11 feel more consistent and is a big goal for the Windows 11 wave of releases.
The code references also point to new features and areas within File Explorer, including new "Activities," "Conversations," "Shared Status," and "Insights" panes which will likely integrate with Microsoft 365 and provide updates to files such as shared Word documents.
I also hear from my own sources that this new modern design for File Explorer will also be more touch friendly, with larger hitboxes and a simpler UI for areas such as the sidebar and header.
For now, it's unclear when these updated File Explorer designs will make their way to Insiders for testing.