Share a folder and make some of its subfolders available to one user group and not available to another user group which also has share permissions on the root folder.
The difficulty in this was that if I share "Folder 1" for "user group 1" with full permissions, then this "user group 1" is able to access all of "Folder 1" subfolders. It is because "Folder 1" inherits the "Security" permissions from it's root (in my case it was "Users (DOMAIN\Users)" with Read & Execute, List Folder Contents and Read permissions on "D:").
You need to remove these inheritable permissions.
To do this:
Right click the shared folder "Folder 1" and click on Properties.
Go to Security tab and click on Advanced button.
Clear the Allow inheritable permissions from the parent to propagate to this object... checkbox (screenshot).
At the prompt click Remove to remove inherited permissions (screenshot) and then specify your own.