MatBatchUEr examines the content browser directory (and subdirectories) of your choice for textures, testing to see if they match any of the patterns you've described and sorting them accordingly. Everything that doesn't match a known pattern gets treated as belonging to the default parameter you've selected. It will then use a base material of your choice as a pattern to create material instances for every 'group' it finds, where you want them, keeping directory trees intact.