Using damLinkField you are only allowed to select assets, it does not let you select folders. A customer wrote in as they would like to choose a folder (f.e. to display all images in that folder).

There is a workaround using the linkfield, but the chooser is different, the JCR Picker doesn't have an image preview, the saved value is just a UUID and not an itemKey, which is used in all damfn methods.

Steps to reproduce

1. Dialog definition with damLinkFiel
2. Try to select a folder instead of an asset
3. Note that the "choose" button is disabled unless you select an asset
4. You can remove the IsAssetRuleDefinition rule that way, you can use the damlinkfield to select folders. the chooser.yaml file located in the resources app under /dam-app-core/dialogs/chooser.yaml but this produces follow-up errors

Additional notes
This was working as expected in Magnolia 5.7

Workaround
Decorate https://demo.magnolia-cms.com/.magnolia/admincentral#app:resources:edit;/dam-app-core/dialogs/chooser.yaml:edit and change the availability rule as you wish.