File name same as folder name, ok?
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Is it ok to have a folder and file name to be both the same
e.g
File name would be a page that lists a number of products and then within the folder there would be x-product.php, y-product.php etc
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Is the folder itself also a page? Why not just make domain.com/xyz-products/ serve the domain.com/xyz-products.php page? That seems like the most intuitive way for it to work. When people want to get back from a product page within the xyz-products directory to the top level page, they may just edit the URL and delete everything after that (I do this all the time).
If you want to stick with the structure you listed, it shouldn't have any issues other than what I mentioned above.
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There is nothing technically wrong with this, so yes it is OK. I've seen this done before.
Some people also choose to use an index page at the directory level so that domain.com/xyz-products/ resolves with say "index.php". You would need to make sure you provide the right canonical/redirect combination if you do choose to go this route of course.
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Jinx! You owe me a diet coke.