Pretty sure a lot of the replies are from people who "get’ what you are saying because there is an analogous feature in the Cubase Drum Editor.
I think folks are concerned that if you limit the visible pitch pallet then a lot of musical possibilities will also disappear from view (literally). For example without seeing the non-scale notes you might not even consider using them as passing tones. Or lots of very effective chord progressions use chords not entirely within the scale. Granted all of this can be done by unfolding. But the issue is not that folding would inhibit us from doing something, rather that folding would discourage imagining new things to do.
Another concern is that when writing, understanding the interval relationships between notes is often more important than knowing if those notes are in the scale. Folding removes the visual indicator of interval size.
I’m trying to think of a situation where I’d find some advantage in seeing and having access to only the folded notes. Sometimes I do enter a note on the wrong pitch on the right end of the Window because I loose track of the horizontal line from left to right. So I suppose it would help with that - except on several occasions those “incorrect” notes turn out to be happy accidents that result in something useful.
Can the OP give us an example (or two) where and how folding has contributed to their workflow.
***Portions of this post were sponsored by The Union of Accidental Notes and Momentary Modulation.