Obsidian uses markdown, and markdown uses hierarchical # Headings to define a document’s structure.
So, there should only one # Title at the top, and all other headings under it are its children; ## First subsection marks a level 2 section; it’s a child of # Title and a parent to all the ### Headings immediately under it. A ## Second subsection may follow, with or without children. And so on.
As you can see, the only way to coherently fold Markdown sections is to observe the document’s structure — and that is based on the heading hierarchy.
If you don’t care much for Markdown document structure, Obsidian allows you to fold text according to tab-indentation:
Main topic
Subtopic 1
Item 1
Item 2
Subtopic 2
Item 1
Item 2
Here, you’re be able to fold at Main Topic, Subtopic 1 and Subtopic 2.
Hope this helps.