They work in a similar way that both folders and tags contain different items that you can add to them, but in order to add any new items in the first place, you will need to create at least one folder in the app. Please note that you won’t be able to add any new items without assigning a folder to the given item. For example, you can use folders to group your items by projects in the given workspace, but tags could help you organize these items more efficiently just so you could find them quicker in the app.