Document Sets provide advanced flexibility and power for managing content. Per Microsoft, Documents Sets "are designed to manage all aspects of work products. They provide a user interface (UI), metadata options, behaviors, and object model elements that fill a gap in the hierarchy of containers between documents and sites."
Source: Microsoft TechNet
Document Sets can share metadata with their contents, making it easier to tag and manage content. Workflows can be run on individual items within a set, or on the Document Set as a whole (ex. treating the Document Set as a legal case file, where once the case is closed, it is routed with all its content to a Records Center for storage and eventual disposition).
Brought online as a feature of SharePoint 2010, the SharePoint 2013 Document Sets continue to refine the capabilities of this encapsulation method.
- Support for OneNote
- Document Set icon now appears in search results
- Folders supported, including the option to use folders as a default document (We will discuss if a folder should ever be used momentarily…)
- Support for easier aggregation since web parts such as the Content Query Web Part understand and can display Document Sets
- Better developer support through Client side and Server side API improvements
- Versioning improvements
- Search directly in a Document Set
Source: Microsoft Ignite
What's Still Missing
Per Document Set Views from the Content Type Hub: While the capability exists to configure a view within a Document Set that is different from the view used by the library it resides in, it is not available as an option from the Content Type Hub for Document Sets that cross libraries. For example, you may want to show more refined site columns within a Document Set view in order to assist with findability across four separate libraries that all use the same Document Set published from the Content Type Hub.
Document Set based Metadata Filters: The capability to filter content within a Document Set via a Metadata Filter Web Part. While Search is great, "Finding" is better!
Single Faceted Encapsulation Objects (aka, Folders): The capability to add folders within a Document Set creates a huge risk of nesting and false hierarchies. Please see "Folders are Evil and What to Do About Them". The intended use of a folder should be for security encapsulation. This may add value if you need to separate content within a Document Set via permissions, since you could create a folder named "Classified" and then hide the folder from the view using the "Show all items without folders " option in the Folders management section of a view. The end result is that users will only see the content they have the rights to see/access and the non-nested folders used for security are hidden.