Dear Annabelle Bitterman,
Good day!!
I understand your concern and to my knowledge, I am sorry to convey that there is no out of the box feature or setting in the SharePoint Online to create a folders and sub-folders from the Excel file.
I agree with you on having the ability to create folders and sub folders in the SharePoint Online from an Excel file will benefit the users and I suggest you to add your valuable idea as feedback in the SharePoint · Community (microsoft.com) which is the best place to share our ideas and improve the Microsoft products.
Moreover, I believe you can achieve your requirement can be achieved with the help of the custom Power Automate flow and I would like to suggest you give a shot by posting your concern in the Microsoft Power Automate Community - Power Platform Community to get the detailed help from the Power Automate experts on the possibility of your requirement.
Appreciate your patience and understanding. Have a great day!!
Best Regards,
Sophia