The Google Mail Blog took the covers off a new feature in Google Mail (GMail) that allows for nesting of folders. As I mention in the text, the labels in Google Mail enable quick organization of your messages. Unlike folders, you can apply multiple labels to a message so that is essentially filed in multiple locations.
This does not appear to be new, since many GMail users have been creating nested labels for awhile. The way to do it is simple. Create a top level label, then create a new label that starts with the top level label, and is followed by a back slash:
top level: Libraries
sub label: Libraries/new_label
When that gets loaded in GMail, it will appear nested. If you use IMAP e-mail, it will appear as nested folders. I have not seen any change in the label capability in GMail, so this manual method continues to be the primary way to make nested labels. I wonder if this was a beta feature or something that wasn’t ready for prime time prior to the announcement, although the functionality has been available for years.