It's not made abundantly clear by the documentation but this works in two very useful ways:
1.
Given a path that doesn't exist, it will create all necessary sub-directories as well. If you pass the path "c:\staging\2011\04" to it and only the staging folder exists, this method will create the '2011' and '04' directories.
2.
It works with UNC paths. If you pass the path "\\computer-name\staging\2011\04" to it and only the staging folder exists, this method will create the '2011' and '04' directories.