While there are many different ways to use obsidian, none of them can be considered correct. Obsidian is, at it’s heart, a note taking app. If the best way for you to organize your notes is with folders, do that. If you prefer to organize exclusively using tags and keep everything at the root, that’s great too.
Try experimenting with different systems of organization to find what feels right for you. There are tons of “tutorials” out there that will say this way or that way is best, but I wouldn’t take them as gospel.
They’re your notes, store them however you want