Use the Web Folder View. This embeds Web Folders into your browser and
allows you to manage this content just as you would with the Windows
Explorer.

You can also create a Network Place (aka web folder) from Windows Explorer.
Click on Network Places to start out.

if you'd please see my other response and let me know
if what I want is possible.

Thanks. I messed with that a bit and found that creating a folder in that view
and then dragging a file there changed the physical location of the file (of
course) but didn't do what I was actually looking for. I really don't care where
the files are stored, I want my view of them to show the hierarchy. I want to
have the folder/subfolder relationship SHOW when I look at my document  list on
the SP site. So I click on the "Shared Documents" link  and then see several
subfolders such as "Templates" , "Procedures", etc. There might also be files
there. Clicking on the subfolder link would then show me the files.

Then I think what you want to do is to make Folder View the default for
your document  library which I beliegve can be accomplished through
FrontPage (check MS for a Q article on this).

We actually like the default 'lists' setup with nice descriptions, etc. Was
just hoping that one line in the list could be a sub-folder.

OK. Since I can't have nested  SP lists I'd like to redo my single
shared documents list into multiple lists. With my limited SP
knowledge, I can't see how to MOVE documents from one list to
another without deleting from one and uploading into another. There
must be an easy way to do this... How?