Lightroom does create actual OS folders when you import. And Lightroom does permit renaming, rearrangement, subfolders, etc.of them. Furthermore, -any- work with OS folders should only be done in Lightroom, as manipulation outside of Lightroom breaks links and will create problems. Having said this, you need to just forget the idea of having the OS "take orders" for the other functionalities you've listed. Lightroom's system of collections, collection sets, and smart collections -do- all the things you've mentioned to allow you to categorize at will using keywords. I agree with DJ about nomenclature, but at the same time it's afair to say you can use collections and collection sets as if they are virtual folders. I suspect his caveats are like mine, that if you do this without underlying keyword tagging, they remain ephemeral - "slop (virtual, if you will) collections" and you can easily lose track of images and have a hellacious time restoring order without a keyword underpinning. In particular, if you use smart collections, the mere keywording of an image automagically inserts it into collections already set up along keywording rules.
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