There is no limit to the number of folders and subfolders that can be created. You can create as many as needed.
The hierarchy can go up to 5 levels, with 4 levels of "parent folder" and "child folder".
Permissions can be set at the parent folder level.
Related:
Create folder (Web Browser)
https://teachme.jp/8/manuals/4929440
Create, delete or edit sub-folder (Web Browser)
https://teachme.jp/8/manuals/4929349
How to change user permissions (administrator, editor, viewer) for a folder
https://help.teachme.jp/hc/en-us/articles/22669145457433