You can create a top-level folder, or you can navigate to the folder where you can create a subfolder.
Tap the menu icon () whether at the screen showing all the top-level folders (shown on left) or within a folder (shown on right).
If at the top level, you see the choices on the left. If within a folder, you see the choices on the right.
If you wish to create a top-level folder, make sure that you are seeing the menu on the left. Otherwise, make sure that you are within the folder where you wish to add a new folder. In either case, tap Create Folder. When prompted, enter the folder name and tap Create.