The idea of folders and sub folders is not that difficult to grasp.
Individual files (like photographs) are stored on your hard disk. Rather than have them scattered all over your disk it makes sense to put them in a folder. A folder is nothing more than a container (rather like a drawer in your kitchen for your cutlery)
So you may create a folder called "Pictures" (you can use any name you like).
Rather than having all your pictures in that one folder you can create more folders INSIDE that folder (these are called sub-folders). You could have a folder called "Wedding", another called "Wales Holiday" and so on.
So going back to the cutlery drawer analogy, the subfolders are like the differnet sections you have in your drawer for your forks, knives, spoons etc.
You can of course create folders INSIDE sub folders and so on.
So in simple terms folders are just places to store files of a similar type. You can have a folder for pictures, another for music, another for documents etc. Or if you were working on a project you could have one folder that contained a mixture of documents, music and pictures.
In fact Windows does come with some of these folders already created, and clicking on your Windows start menu will often display a link for the folders for these items - documents, photos, music etc.