Hi
check out this article:
The author has stated that he tested with 30 levels of nested folders with no issues.
This article also looks at the differences between folders and libraries, and recommendations for the structure of both:
https://sharepointmaven.com/should-i-create-a-folder-or-a-library-on-a-sharepoint-site/
If this is primarily used for File Storage, you could look at Azure Files as an alternative.
Hope this helps,
Thanks
Michael Durkan
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