[curt.clifton]

"Folder" has a specific meaning in OmniFocus—you can create folders in the left-hand sidebar in Planning mode. I'm guessing that the nesting you're seeing is what OF calls "Action Groups".

At any rate, the nesting of a dragged action is controlled by where you drop it. If you drop to the right of the checkbox above, then the dragged action is nested. If you drop to the left of the checkbox above, then the dragged action is a sibling.

There is a visual indication of this that you can experiment with. Click and drag on the "handle" bullet of an action. Drag the item below another action without dropping it. Then move the mouse, still dragging, back and forth. You'll see that the arrow indicating drop location extends as you drag right and contracts as you drag left.

Hope that helps.