There is however a limit depth-wise as shown below. There does not seem to be a real limit to the amount of sub-sub-subfolders you can do, breadth-wise besides limits that may be imposed by your hard drive's file system and/or by the Game. Subfolders are folders within folders - a 'Floors' subfolder of Packages would be Documents\Electronic Arts\The Sims 4\Mods\Floors. Subfolder Most, if not all, content can be placed in subfolders.
You can safely rename almost all Sims 4 content, changing the file names to something that is more descriptive and easier to identify. Rename Generally Sims 4 content may come with file names that are not really very descriptive. Here are the different ways you can organize your content to make things easier to find. For all information on installing content and getting it working in your game, see: Game_Help:TS4 CC Basics for a Summary. This guide does not explain how to install custom content and get it working in your game, nor does it explain all the little details about things you need to keep in mind when installing content - it is ONLY about organizing.
It makes finding problem files and removing unwanted content SO much easier. It is STRONGLY advised you choose a method for organizing your custom content and stick to it religiously as you download. This guide is meant to show how one can organize their custom content.
