Please note: Answer edited after Xavier's Answer
I am trying to use different Build Flavors for one same Application project in Android Studio. However, I seem to be having a terrible time configuring it to work appropriately.
If you got in the Studio preferences, under the Gradle section, you can enable auto-import for your project (we'll enable this by default later). This will let Studio re-import your build.gradle whenever you edit it.
Creating flavors doesn't mean you're going to use custom code for them so we don't create the folders. You do need to create them yourself.
If you look at my IO talk you'll see how we mix in together values from the flavors and build type to create the variant.
For the Java source:
src/main/java src/flavor1/java src/debug/java
are all 3 used to create a single output. This means they can't define the same class.
If you want to have a different version of the same class in the two flavor you'll need to create it in both flavors.
And then your code in src/main/java can do
depending on the flavor selected, the right version of com.foo.A is used.
This also means both version of A must have the same API (at least when it comes to the API used by classes in src/main/java/...
Edit to match revised question
Additionally, it's important to put the same A class only in source folders that are mutually exclusive. In this case src/flavor1/java and src/flavor2/java are never selected together, but main and flavor1 are.
If you want to provide a different version of an activity in different flavor do not put it in src/main/java.
Do note that if you had 3 flavors and only wanted a custom one for flavor1, while flavor2 and flavor3 shared the same activity you could create a common source folders for those two other activities. You have total flexibility in creating new source folders and configuring the source set to use them.
On to your other points:
It's normal that the 2nd flavor source folder is not blue. You need to switch to the 2nd flavor to enable it, and then you'll be able to create packages and classes inside. Until then, Studio doesn't consider it to be a source folder. We'll hopefully improve this in the future to make the IDE aware of those unactive source folders.
I think it's also normal that you can't create resource files in the res folder. The menu system hasn't been updated to deal with all these extra resource folders. This will come later.