I've been doing a lot with organizing my data in Obsidian, and I've found utility in having both folders and metadata. Using the Dataview plugin makes proper metadata fields really powerful; you basically turn your collection of markdown files into a NoSQL DB. Having a folder structure is handy too though because you can have different metadata templates applied to new files in different folders with the Templater plugin.
Obviously that is dependent on a fairly specific workflow, but I think it's worth considering "why not both?"