Both the use of tags and the file explorer (e.g. folders) are different ways of adding order/structure to ones vault. Tags can easily be used in the same way as a folder.
It would be cool to have a file explorer like menu (with expandable folders), except the folders are created on the fly using the existing tag system.
So if you have the tag #MOC01-Hobbies is displayed as a folder titled “01 Hobbies”, with all the notes that have that hashtag.