How to make pages appear as folders? is it good for SEO?

Hi,
I've noticed many websites choose to construct their web pages as what appears to be folders for each page rather than files on the same folder,
e.g: domain.com/word/word2-word3-word4
or: http://university.which.co.uk/about/
You can see that if you browse to the privacy policy, contact us, etc., all destinations appear to look as folders.
Is this done for SEO purposes? is it effective?
How can I do this as well? is there any tutorial? I'm running a dynamic PHP website if it matters….
How to make pages appear as folders? is it good for SEO?

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