If drive encryption is done at the folder-level, do all the files inside the folder get encrypted as well?

Yes, the files inside the folders will be encrypted. All the files will have the same password that was used for encrypting the folder.



If drive encryption is done at the folder-level, will it also encrypt the files in the sub-folders too, if there are any?

Yes, they will also be encrypted.



If I add a new file into an already encrypted folder, will the new file get automatically encrypted?

Yes, it will get automatically encrypted with the password of the folder-level encryption.