What are pros and cons of having dedicated application pools over keeping web applications in one default app pool?
Yes, create "Applications" out of each sub folder. Than the application can have a separate application pool, the same will work for Virtual Directories.
Application pools allow you to isolate your applications from one another, even if they are running on the same server. This way, if there is an error in one app, it won't take down other applications. Additionally, applications pools allow you to separate different apps which require different levels of security.
Application pools can contain one or more worker processes. Each worker process represents work being done for a Web site, Web application, or Web service. You can create a Web garden by enabling multiple worker processes to run in a single application pool. In IIS 7 and later, each application pool uses one of two .
Pros:
Cons:
The primary reason for combining sites in app pools is to conserve memory. There's a large memory overhead in running several w3wp.exe processes. If you have no specific reason for splitting them up, it's better to keep them together.
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