Folders are simply a way to organize content. Folders have one extra attribute called Sort contents by. This value determines the sort order for items within the folder, either Title (which sorts by the title of the item alphabetically) or Post Date. You can also choose whether the sort happens Ascending (from the lowest to highest) or Descending (from the highest to lowest).
To add documents to a folder, you first create the folder and save it. Then, look over on the right side of the screen for the green arrow. By clicking the arrow, you will navigate "inside" of it. You can then add additional folders, links, documents, headers and ads.