There are typically two reasons:
1. machine performance
2. human performance / enjoyment
Not necessarily in that order.
The device might start to display a folder noticeably slower after a certain point, let's say a few hundred files. And it's generally considered harder to navigate more than a few pages than it is to use a few (sub)folders.
But either way the same thing applies: you can try it, and if you like it there's no problem.
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