My iPod uses playlists, albums, genre's and such. No "folders". I guess I could take a folder and make a playlist for that but in short, the answer is on personal computers, files are in folders. On devices such as an iPod there is no exposed file system for the songs we play. Why I have to be very careful is because DISK MODE on an iPod could have the songs in folders but unplayable.
Im waiting for my ipod and im woundering how i upload not just the songs to my ipod but the folders they were in aswell.