Are you using iCloud??
If so, open System Preferences > iCloud
Deselect the box next to Bookmarks then reselect it then restart your Mac.
If you can retrieve your bookmarks, make sure and make a copy so you have a backup.
From your Safari menu bar click File > Export Bookmarks
Save the Safari.Bookmarks.html file to an external source. If need be you can re import the Bookmarks from the File menu.
Yes, it will bring back your Bookmarks. That's why I suggested you do this.
Folders aren't being erased on a whim. You moved a folder while iCloud was syncing. That's why it disappeared and it may not reappear.
If you want to try and get it back deselect the box then reselect it then restart your Mac.
This is Apple's suggestion as noted here > iCloud: Troubleshooting iCloud Bookmarks < see Troubleshooting Bookmarks on OS X Lion.
edited by: cs
I tried this without success. I noticed that once the folder disappeared (the one I was dragging over to place within another folder while rearranging bookmarks), it also disappeared on my iOS devices as well. This happened very quickly before I could even get any of them shut down or disconnected from the network.
It seems that this would most certainly be classified as a BUG in Safari and/or it's interaction with iCloud. If I move a folder and the synchronization process is running to synchronize a previous "edit" or "move", then the folder being moved should revert back to it's original location instead of simply disappearing. Is this an issue with Safari, iCloud, the supporting framework, or Lion OS?
Thankfully I have a TimeMachine backup from last Friday that I will be able to use for restoring the bookmarks.plist file. But for future reference, is there a way -other than turning off iCloud sync for bookmarks- to extend the timeframe allowing for multiple bookmark edits prior to synchronization, or maybe force synchronization to wait until the bookmarks list is closed?