Consider the following scenario:
In SharePoint Online, you share a folder on a site collection with a user.
You click Activate to enable Limited-access user permission lockdown mode for a SharePoint Online site collection.
Note: You may have previously enabled this feature, or it may have been enabled because it's required for other features that you're using, such as Publishing sites.
When the user browses to the shared folder, or to a file or a folder within the shared folder, he or she receives one of the following messages:
You need permission to access this site.
To work around this issue, use one of the following workarounds as appropriate for your situation:
Share individual files but not folders.
Share a whole site collection or subsite.
If your site doesn't require Limited-access user permission lockdown mode, deactivate this site collection feature.
Note: Other features such as publishing may require this feature to work correctly.
When you share a folder with a user who can't access the parent folder or site, SharePoint assigns the user limited access to the parent items. Specifically, SharePoint lets the user access the folder without obtaining permission to access the parent folder and other items (other than limited access). However, after Limited-access user permission lockdown mode is enabled, the user doesn't have access to the folder because the necessary limited access permission on other items no longer works correctly.
What is "Limited Access" permission?
The Limited Access permission level is unusual. It lets a user or group browse to a site page or library to access a specific content item without seeing the whole list. For example, when you share a single item in a list or library with a user who doesn't have permission to open or edit any other items in the library, SharePoint automatically grants limited access to the parent list. This lets the user see the specific item that you shared. In other words, the Limited Access permission level includes all the permissions that the user must have to access the required item.
For more information about site collection features that includes Limited-access user permission lockdown mode, see Enable or disable site collection features.
Still need help? Go to Microsoft Community.