You need multiple folders if you want to use different settings for each WoW instance (resolution, key bindings etc). Five may be "overkill" in many cases, but I personally want to know I can fine-tune each instance exactly the way I want.
But in most cases I think at least two folders are recommended. One were your master is launched since you may want to use higher graphic settings in that one. One folder where all your slave instances are launched since graphic can be set lower on those.
Edit: However, have never used ISBoxer so maybe you can do the same there?
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