Folders are arranged in order they are created, with the newest folder appearing at the top of the folder list. You may re-arrange those folders by dragging and dropping them into any order you require. Simply drag a folder to the desired location within the same project and drop it into the space created for the folder.
You may also drag and drop folders into other folders. To do so, simply click on the folder, and drag it over the folder you are targeting. Once the target folder is highlighted, you may drop the folder into it.
For a short video demonstrating how to organize folders click here.