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Your analogy contexts <- tags and folders <- organization is reasonable.

I have top level folders for Areas of Responsibility, for example ...

Sales
Marketing
Career
...
Surroundings
Well-Being
Family
...

I have sub-folders in these areas to further refine them. After this level, I put projects (folders or projects themselves). So, most of my projects are two levels deep. The one exception is the single-action groups that serve to hold the CHORES for the given area. An example ...

Surroundings (area folder)
- Chores @ Surroundings (single-action project)
- House (folder for projects)
-- Roof Repair (project)
-- Landscaping (project folder)
--- Landscaping Company (project to choose landscaper)
--- Yard Layout (project to define yard layout)
--- Landscape (project to complete landscaping work)

My contexts are either locations (work, home, errands, desk, ...), tools (computer, iPod, phone, ...), state-of-action (bills, reviewing, planning, ...), or personnel (spouse, daughter, colleague X, someone, ...).

The beauty of OF (vs Things) is the ability to nest projects in organization and to set projects as single-action, parallel, or sequential. Some folks argue, the ugly of OF (vs Things) is the inability to set multiple contexts (tags).

Hope this helps.

--
JJW