So you can manage images via collections, which seem essentially like labels by another name, or you can put them in folders which moves them around on your storage, but how about virtual folders? So it uses the real folder paradigm - they act like real folders, in that you can have sub folders and sub sub folders, and they can only be in one place at a time - but it's just in Lightoom.
Later on you can commit it to the real file system if you want I suppose.
I'm organising 2800 scans of family photos from the 1940s(possibly even 30s) to the 2000s and collections only go so far, I can't sub-categorise beyond one level, and collections will become somewhat unweildy, though I'm sure I can work around it... but a hierarchical folder system that doesn't actually mess with the real locations of the photos feels like it might be more appropriate. I have to work out what decade photos belong to, then try to work out what part of the decde they belong to, and then perhaps group some of them into events. Being able to nest that - and not have them anywhere else at the same time would help, but I'm not really keen on moving the physical files and that's an unnecessary complication.