App Folders are a hierarchical structure, meaning that each Folder can have child folders. A child folder is usually used for a sub-topic under a broader topic.
Example: A Year Groups folder may have child folders for Year 1, Year 2, Year 3 and so on. And within each year group, they can have further child folders.
You can add a child folder while writing a Notice or from the Folders screen. Just select a parent folder when adding a new folder and your new folder will become child folder.