You can still see everything in folder view when browsing files, but only 20k are indexed when you search/sort (by songs/artist/albums/genre). Andy explained it before, N3Pro, the same as flagship N8, is Unix based which has a different file system handling compared to Android, and they (Cayin/Hiby) had to set the limit based on indexing file size and other limitations associated with it. But if you have a lot more files on your card, some people find it useful to split everything alphabetically in sub-directories for a faster folder search.
This is the only drawback of this DAP, of coz I know nothing is perfect...