vmkfstools -i reads the complete snapshot-chain and writes that state into a new vmdk.
vmkfstools -i /vmfs/volumes/datastore/Folder/VMName-000002.vmdk /vmfs/volumes/datastore/Folder/thin.vmdk -d 'thin'
If you want to convert the basedisk and keep the snapshots useYour command creates a file that looks like a snapshot - because of the name you used.
You probably want to use a command like
vmkfstools -i /vmfs/volumes/datastore/Folder/VMName-000002.vmdk /vmfs/volumes/datastore/Folder/thin.vmdk -d 'thin'
If you want to keep the snapshot and only convert the basedisk use
vmkfstools -i /vmfs/volumes/datastore/Folder/VMName.vmdk /vmfs/volumes/datastore/Folder/thin.vmdk -d 'thin'
then you need to edit the snapshots that refer to the basedisk manually