I don't think its that complicated but can understand at times things can be little overwhelming at the start.
I will try to explain little bit here:
application - In order to do any task with FMS, you need to connect to FMS and to particular application. Now "application" can have user-defined logic - in that case you will need to write your code in file called "main.asc" which needs to be present under the application which you create. Now if yours needs don't call for any server-side code - then its just blank application. FMS comes with ready to use applications "live" and "vod" (but they are specially packaged applications which you cannot modify - they are signed applications - please don't get confuse here - if you want we can talk about this later)
streams - Now for "VOD" you will not find any "streams" folder instead you will find media folder where all your media files would be present. Now when you create your own application, you will need to create streams folder under your application folder. Under streams you will need to create "_definst_" folder and keep all your media files here - but thats not compulsion. "_definst_" just indicates default instance - that means whenever anyone connects to to your application without specifying any instance name - it will connect to _definst_
I also see that you want to separate out your files according to genre - i will give most simple solution where you don't have to write any server-side code
So lets take example
You want to create application named "firstapp" and you have three media files rock.mp3, jazz.mp3 and hip-hop.mp3 (i am not not music expert - but all these files are of say different genre)
So first create folder named "firstapp" under "applications" directory of FMS.
Now under folder "firstapp", create folder called "streams". Now under "streams" create 3 folders - "rock","jazz" and "hiphop". Now place rock.mp3 inside "rock" folder, jazz.mp3 inside "jazz" folder and hip-hop.mp3 inside "hiphop" folder.
Now you are ready to go with some client-side coding:
So client who chooses to listen to rock, we need to connect using connect uri as :- "rtmp://<server-ip>/firstapp/rock" and stream name as "mp3:rock.mp3"
So similarly others would connect accordingly :
Connect using - "rtmp://<server-ip>/firstapp/jazz" and play "mp3:jazz.mp3"
"rtmp://<server-ip>/firstapp/hiphop" and play "mp3:hip-hop.mp3"
Hope this helps - but i would seriously recommend you read FMS docs starting with
http://help.adobe.com/en_US/flashmediaserver/devguide/index.html (you will find other docs on same page i suppose)
So