Organizing your Media
iTunes was the first application to introduce Apple's famous "Library/Collections" method for organizing items. All music you add to iTunes is stored in a central storage area called your "Library". You can then create lists of music called playlists, which include only links to songs that live in your library.
To create a new blank playlist, press the + button below the sidebar.
Folders are a convenient way of keeping playlists organized. They also act like playlists themselves, becoming a sort of playlist of playlists. Selecting a folder in the sidebar will display every song in every playlist contained within it in the contents pane. With a little imagination this can prove to be a powerful feature.