It's not really exaggerated and it's probably worse now. This is why it took so long for iPhones to even support the concept of a file manager; most people just do not get it no matter how much you explain it. I have three kids in school, from grade school to high school, and the concept of files is just... not a thing? Basically everything is in Google Docs or through some web communication type of thing. Email is all through Gmail or similar, and the idea of downloading a file or even just organizing it in Google Docs is not a thing they do. They've grown up with near instant search, and for most people that's going to suffice. I grew up on DOS and then later Linux and such in high school, and even I eschew much folder structure more than a level or two deep (though my naming conventions for files has improved significantly) outside of programming projects.

That said, both of my two youngest kids followed the same path that you can probably find through most of the software industry, and though it's not my day job, me as well. And that's wanting the computer to play a game or similar, and then having to learn this thing. Minecraft has probably done more for the next generation of software engineering than any coding class or high school program. Both my gaming boys are totally comfortable moving around the file system. The youngest (10) is absolutely obsessed with modding, so he started by changing some params in an XML or JSON file or whatevs to now very nearly writing his own code. He publishes mods every now and then, which are more generally patches on existing, and I'm guessing within the next year or so, he'll be writing from scratch.