I am pretty new to TFS and source control. I unable to understand the advantage of branching. Since i can do the same stuff by creating 2 folder main and development, when I am done with development.I can merge the code using any diff tool with the main branch.
Then whats the point of having branches ? I know there must a huge advantage but i am unable to understand.
(UPDATE: TFS now supports git for version control so the rest of this answer no longer applies)
I would google branch-per-feature.
The main advantage of branching is that you can work on a feature and not be interrupted by anyone else's work. When you are ready, you can merge and see if many features work well together or not. This is usually done as the feature is developed but for small features can be done once the feature is complete.
The advantage is that you have a clear history of what you did to implement something. Without branches, you would have a whole lot of commits mixed together with other features' commits. If QA does not pass a certain feature, you have your work cut out for you to put together another build using just the commits for the other features. The other alternative is to try and fix your feature so that QA passes. This may not be doable on a Friday afternoon.
Feature toggles are another way to omit work but this increases the complexity of code and the toggles may themselves have bugs in them. This is something to be very weary of and see how this became an "acceptable" work-around.
Branches are also used to track changes to multiple versions of releases. Products that are consumed by multiple customers may be in a situation that one set of customers is using 1.0 of the product while others are already on 2.0. If you support both, you should track changes to each by branches that are designated to them. The previous points still apply to developing for these branches.
Having said that, TFS is not ideal at branch-per-feature for a number of reasons. The biggest is that it does not support 3-way merges - it only has what is called a baseless merge. The way history is tracked, TFS cannot show you a common ancestor between the feature branch and where you are trying to merge it to. This leaves you potentially solving a lot of conflicts. In general, a lot of people that use TFS shy away from branching for this reason.
3-way merges are great because they will show you what the common ancestor is, what your changes are and what the changes in the other branch are. This will allow you to make a very educated decision on how to resolve a conflict.
If you have to use TFS, I would suggest using git-tfs to be able to take advantage of 3-way merges and many other features. Some of them include: rerere, rebasing, disconnected model, local history, bisect, and many many more.
Rebase is very useful as it allows you to alter a feature to be based off of another starting point, omit commits, squash commits together, split commits, etc. Once ready you can them merge into an integration or release branch, depending on the workflow you decide upon.
Mercurial is also another one that may be easier to use, but will not be as powerful in the long run.
If you have the opportunity, I would highly recommend moving away from TFS for source control due to a lot of limitations when compared to modern day DVCS.
Here is a nice set of guidelines to follow if you want to effectively manage branching/merging:
http://dymitruk.com/blog/2012/02/05/branch-per-feature/
Hope this helps.
There is a lot of information to read through, but there is TFS Branching Guidance located here if it helps at all - http://tfsbranchingguideiii.codeplex.com/