Filing with Folders
With iTunes 5 came a new way to file music—in Folders. By invoking the File > New Folder command, you can lump a bunch of playlists together into a single folder. Folders are a great way to keep your playlists separate from your spouse's or to gather groups of similar playlists (All My Jazz Playlists, for example).
Folders don't translate to the iPod, however, as it's incapable of creating nested folders. When you move a folder full of playlists into the iPod, all the songs within all those playlists appear in a single playlist that bears the folder's name.