I think he's talking about the icons you see over folders in Explorer added by some applications. Dropbox will add icons indicating the sync status of your Dropbox folder over the folder icon itself.
When he says "Dropbox wins by having three spaces," he doesn't mean there are three entries. He means Dropbox prepends three spaces to the identifiers so they're sorted first in the list:
johng|1 year ago
But, interesting, I never knew the overlays were limited.
FroshKiller|1 year ago