A materials “folder” is a directory of .skm files on disk (or storage.)
Each model has a unique materials “collection”, which will be empty if the template used to create the model has no components that have materials.
However the SketchUp UI blurs the distinction between “collection” and “folder”, by allowing you to designate local folders as “local materials collections” which will thereafter appear in the Materials Manager collection picklist (along with those that are distributed with SketchUp.)
You can create an organized hierarchy of folders and sub-folders for your custom materials collections. (It does not need to be a “flat” single folder deep list.)
So I’d recommend you put your skm and texture files where you can find them even later when you update SketchUp to later versions. The skm files are actually zip archives with internal XML property sheets and the texture file(s).
Suggested locations for version independent support files:
I personally like the documents path because computer to computer “migration” tools will always select the user’s documents path to add to the migration archive.
Some people (on the Mac,) might use:
for these user folders, as the version dependent folders are located below this in sub-folders.
But to each their own. Where ever you will best remember, is best. This is because you’ll need to tell SketchUp in each new version where these folders are.
This is what the Materials utility menu looks like on PC: