UNIX for Dummies Questions & Answers

Hi All,
I am new to SFTP, would like to understand a few things about SFTP.
Below are a few questions.

1) I have two servers and accounts in each
Say, user1@server1
user2@server2
I have setup password less sftp connection (rsa keys) from user1@server1 to user2@server2
i.e., i am able to connect to server2 from server1 using "sftp user2@server2"
Now, i have a folder "/u16/mydir/folder2" with "d---------" access rights in server2.
Owner is different from user1 and user2. Say "folderowner"
Step1 : i logged into server2 directly using user2.
when i do "cd /u16/mydir/folder2" .. it worked.
( I assumed that will throw error as there are no read and excute access on that directory).
How was this possible?

Step2 : i logged into server1 and connected to server2 using "sftp user2@server2"
now when i did "cd /u16/mydir/folder2" .. it did not work.

What is the difference? When i tried using direct login into server1 (Step1) it worked , but when i
use same user through sftp it did not.

2) I came across certain posts about below errors
Couldn't canonicalise:
Couldn't get handle:
What are the scenarios these errors occurs. Most of the posts say that its Permission problem,
Is it possible for anyone give me a detailed steps to replicate these errors, so that i can understand the
reasons correctly.

Thanks
Vinod