You can use Labels to organize your Projects and Stories - the labelling system is more flexible than simple folder-like structure, as it allows you to file an item in more than one place, and recreate all sorts of hierarchies not possible with nested approach.
A label can be created on the spot - while editing a Project (in the plan section) or a Story:
A Story or a Project can be assigned multiple Labels at the same time. Additionally, a Label can be available only to Stories, Projects or be assignable to both.
(You find the Label manager in the main application menu)
You can change which type of item a label can be assigned to by selecting one of the available options:
Renaming and Merging Labels
You can rename a Label, by clicking on its name. If you want to merge it with an existing one, you can give it an existing name. If you want to merge multiple Labels, you can select them and use the "Merge" option:
When merging labels which are assignable to only Projects or Stories, we will preserve that relationship. If you're merging Labels which apply to either Projects or Stories - the resulting new label will be assignable to both.
Other Label actions
You can change the labels color by clicking on the colored circle.
A Label can be removed by using the "more" (...) menu and selecting "Delete"