It works a little differently.
First of all, all users have full access to their own folders and files in their own account. By default, sub-users can be assigned with their own "private" storage space. They can upload files to their own "My Storage" and have full access to those files / folders. (You can logon as sub-users and delete the default files / folders in sub-user accounts and then assign 0 storage space to sub-users).
To restrict sub-users from accessing a folder, you must use a shared folder. You can create a folder in your own account, then share the folder to the sub-user with certain access level. You can set the permission to Read-only, Add / Upload, or Full Access, etc. Sub-users use your account storage space and download bytes when using your shared folders.
If you share a folder to User1 and User2 with "Add / Upload" right, then both User1 and User2 can upload files to the shared folder. User1 cannot modify / delete files uploaded by User2 and vice versa. However, User1 and User2 can delete files uploaded by themselves.
You can also share a folder to User1 and share another folder to User2. This way, User1 cannot see the folder(s) shared to User2 and vice versa.