It will go down both trees. The folder traversal spec selects a Folders childEntity member, which is a list, and each object in that list is matched against the other selection specs.
If you were only interested in a single Datacenter, you'd use that Datacenter MOREF in the object spec instead of the root folder MOREF.
You'd probably have to re-arrange the traversal specs so the datacenter one pointed directly at the folder one, instead of by name, since the recursion is now starting below the datacenter instead of from the root.