I've had it on my S3 for some time now and when I sync playlists, MM creates folders for each playlist and downloads the files for each playlist to their respective folder including the number prefix so the playback order is correct. It also creates playlist files, m3u, but these are empty. So I just go right to the folder to play.
So the other day I got a Note 8 and wanted the same setup. But when I sync playlists, MM creates folders per album, per artist to store the files, with playlist files in a separate playlist folder. The playlist files are empty too. But now, because the files are in all these album folders, I can't play them as I have them set up in their playlists within MM.
I just find it strange that the app is syncing in two different ways on these devices. I guess the playlist file issue (being empty) is another bug.
I have to say the app has great potential and syncing via wi-fi this way will be awesome in itself once the bugs are worked out.