SOLIDWORKS Sheet Metal includes a Sketch Transformation folder in the Flat Pattern feature when a sketch is added to a face that is not the fixed face (i.e. a face that moves when the piece is flattened). Within this folder is a derived sketch of the original so it stays on the face as it flattens. You cannot edit this derived sketch as its shape/position/size is controlled by the parent sketch.
With a part in the folded state, a sketch is applied to a face that is not fixed when it flattens.
Now when this part is flattened, the Sketch Transformation folder and derived sketch is added to the new location of the face.
NOTE: If a sketch was created on the non-fixed face and then used to create a feature like a Cut-Extrude, there will be no Sketch Transformation folder as the geometry of the cutout will follow the fold/unfold process. Typically sketches are added by themselves if a user wants to have etching or markings without a feature that can be included in the DWG/DXF export or drawing.
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