The Kindle doesn't care about directories at all. It can be in the main documents directory or under documents/blahblah/blah and it will still just show it in the main view as if they all were inside the documents directory.
If you do set something to be in a collection then you can't move it from where you originally stored it on the Kindle. The exact location and filename are used to identify that file. Changing the directory or the filename will cause it to think that this is a new document.
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