Quoth the user manual about the "Treat Solution/Projects as directories when selected" option:
Select to treat solutions and projects as directories when P4VS runs Perforce commands.
Which doesn't really illuminate things. The manual says it improves performance with large solutions, which sounds promising to me, but the p4 commands which are run on load appear to be the same with the option on or off.
One note on my situation: The solution file is not in a directory above the vcproj files (or most of the source files), and neither the sln nor the vcprojes are checked in to the depot (they're autogenerated). Might either of those make a difference?