How can I import my iTunes folders into Music?

You shouldn't need to make playlists for individual albums in most cases. The albums and recently added views already group these together. You will find the View > Show Filter Field tool useful for locating content. Also try the Column Browser in the Songs view.

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Restore the backup of the iTunes folder from Mojave into the Music folder of the Big Sur system, or the root of an external drive, then press and hold down option as you launch Music and keep holding until asked to choose or create a library. Click choose and select the iTunes Library.itl file in the restored folder, after which you will be prompted for a location to save the converted library.

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As far as iTunes or Music are concerned the physical layout of the tracks on the drive isn't relevant. What matters is the metadata in the tracks and any playlists that you create. That said if you want to try again you could turn off the options Keep... and Copy... under Music > Preferences > Files, restore the backup of the iTunes folder once again and try the conversion to a Music Library again. With luck it will preserve the layout this time, which you could then use to help you build playlists in the library.

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Playlists are ordered lists of any number of songs. You can drag whole albums to a playlist to add all the tracks at once. You can organize playlists in playlists folders, within which they sort by their title, but smart lists group first. A playlist folder will show the combination of all its child playlists. You can create smart playlists based on rules. E.g. matching one of a number of genres, or based on keywords that you can put in the Comments or Grouping fields. Experiment a little. I'm not sure exactly what you want to achieve but there is probably a way.

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You're welcome. 🙂

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