You've no doubt seen that Gmail has the ability to assign labels to messages. You cannot create folders, on the other hand. Fortunately, you can make labels function as folders very easily!
Create label
You can label emails manually, but you can also use labels in combination with filters to automatically classify emails. Before you start organizing that, it is wise to create those labels, just as you would first create the folders in your mail program.
You do this by clicking the settings icon at the top of Gmail (looks like a gear) and then Settings. On the page that opens, click on the Labels tab. You will first see a series of labels from Gmail itself and below that you will see a Labels heading with the Create new label button directly below. When you click this, you can create a label that you can add to messages. This could be, for example: Mails from 2011 or Mails from Sabine (assuming you know someone called Sabine...).
Create as many labels as you want. You can even create sub-labels (i.e. label within a label) by checking Place label under and then selecting a main label. This way you can create an extensive folder structure.
Labels are created within Gmail Settings.
Assign labels
You can easily assign labels manually. When you receive an email that should fall under a certain label, select the email (check it or open it) and then click on the icon with the label at the top of the screen (next to the button More).
By placing a checkmark in front of the desired label in the menu that expands, you assign this label to this message. That way you can of course also process a lot of messages at the same time. Now when you look in the left pane of Gmail, you'll see the list of labels you've created appear as if they were folders.
Assigning a label is very simple.
Labels via filters
There is of course nothing wrong with assigning labels manually, but you can also do it very easily automatically by creating filters. The quickest and easiest way to do that is to type something into the search box.
Suppose, as in the previous example, we are looking for emails from someone named Sabine. Click on the down arrow next to the search field and at From enter the e-mail address of the person whose e-mails you want to label (emails you have already received and e-mails in the future). If you now clicked on the Search button (magnifying glass), a search would be made for e-mails that meet these criteria. Instead, however, click Create filter with this search. In the window that appears, you can now indicate that all mails that meet the criteria you just entered should be assigned a label (select that label under Select label).
Now when you click on Create filter, the filter is created and mails that meet the criteria you specified are automatically labeled, making it look like they appear in a 'folder' on the side.
But why do it manually when you can do it automatically?