With Papers 3 you can easily create nested collections within My Collections (i.e. a subfolder within a folder). Nested collections can be created across all platforms that support Papers 3. Simply go to My Library and on the left of the screen you will see My Collections. To add a new Collection, go to the bottom left hand corner of the task bar and select the '+' option. From this select 'manual collection'. This will now add a collection which you can title and add articles to.
To add a nested collection, click on the Collection you wish to create a subfolder within so that it is highlighted in blue. As before, select the '+' symbol on the screen, select 'manual collection' and now a nested collection will be added within the collection that is highlighted.
You can now drag articles from 'All Papers' into this new nested collection. You can also create nested collections within nested collections, meaning you have full control in how your library is organised.