Here is the impact of creating folders on the Kindle’s SD card;

• If you create the folder in the root directory of the card, for example, a ‘read books’ folder, that folder and its contents are not visible on the Kindle.
• If you create the folder in the ‘documents’ folder of the card, the folder itself does not appear on the Kindle, however, the contents of the folder and any sub-folders are found and displayed.

Unfortunately, this behavior doesn’t help much in terms of organizing your books on the Kindle. Hopefully, a future firmware upgrade will change that.