Microsoft's SharePoint Server training describes using library columns alongside folders to make large document collections easier to view. Custom views can sort and filter documents across folders according to the columns added to the library, rather than requiring every search to follow the folder hierarchy.

Illustrative image
Illustrative image.

The referenced video applies to SharePoint Server 2013 and 2016, so its interface is historical. Its organizational approach remains useful to understand: folders provide one arrangement while descriptive columns support other views. Check the equivalent library-view controls in the version your organization currently operates.