can it fit my laptop too?

I can fit my 16.6x11 inch laptop into it vertically, with space front and back for a few other items. My hp laptop is big and heavy. I worry about making the backpack too heavy, but haven't had a problem so far. I am disabled, use poles to help me keep my balance & walk, and do not drive, so I take the bus and/or walk so I use my backpack daily. Answers above re padding sound wise--hadn't thought of that issue. I do have a tablet with a protective case that would be more appropriate for "of base" use.

What are the dimensions of the little bag? The backpack when it's folded?

6' wide by 5" tall by "as flat as you can get it" (1 1/2"). You can get it to 3 x 3 if you have it compressed. Best little traveling backpack!!

can the water bottle holder hold a 32 oz nalgene?

Yes, I just tested it with my husband's 32 oz nalgene bottle and it fit just fine.

How much weight will this hold, example high school/college books?

To be honest, I just don’t think the fabric is designed to be weight-bearing. I think heavy items like books will destroy it quickly and then you may be disappointed with its performance. The bag holds a decent amount of volume, but I think it’s more intended for lightweight items (clothing, water container, keys, wallet, maps, etc)