Next, while you're in the playlist, hit the Burn Disc button in the bottom right corner. You should see a Burn Settings window with options for Audio CD, MP3 CD, and data CD. Choose the MP3 CD option and hit burn.
The drawback to using iTunes instead of burning an MP3 CD directly from your desktop, is that the default settings create a CD with all your files thrown into one directory, just like the playlist you used to create it. The upshot, is that these playlist-style MP3 CDs are less complicated to create, and navigation is identical to playing a regular audio CD.
It is possible, however, to create an MP3 CD with nested folders using iTunes, with one simple trick--sort your playlist by Artist or Album before burning the CD. To do this, simply click on the Artist or Album column headers within your playlist, so that all the songs are alphabetically arranged by artist name or album title. The resulting CD will include a top directory of folders categorized by the column you selected in iTunes.