It is possible to create folders in Photos, but it is not possible to create folders inside other folders. The Files app is better for this purpose. Open the Files app on your iPhone, create a folder, and create your desired subfolders.
Now you can go back to the Photos app, select one or more of the photos you want to copy to your folders, tap the "share icon" (Square with an up arrow), scroll down and select "Save to Files", select the folder or subfolder where the image of the document should be located, and tap save. Follow the same procedure with your other photos (documents)
