I'd prefer tags over folders. Tags are more versatile especially if smart search is included to show existing tags when typing. But yes, some level organization and search is needed.

There is also a similar request here: https://protonmail.uservoice.com/forums/953584-proton-pass/suggestions/46864294-folders-attachments

Need this! I use it especially for crypto wallets

Unable to have a seamless transfer from 1Password until these categories are added. Or provide a work around in notes that allow you to have access to hidden fields or create different sections like in 1Password.

At least when you open the extension search bar prompt is on, by default, making finding the item you want quicker. Unfortunately only on the first opening. When switching vaults it doesn't happen.
But I agree, categories are an important, next to vaults, feature to have. Even more so, when you think about the fact that different categories can have different types, and amounts, of data to store. Not just a login and a password. Banking or ID details, WiFi/network security details etc.
Some of them can be done with notes, but some of them could have categories of their own.

@David no, vaults are too big. I have multiple vaults already-- personal, work, my website, school, etc, and I still really need to be able to organize by category within those vaults.

Of course, you can write it all in notes, but the same mnemonic phrase will be immediately visible when you open a note. Besides, when importing from other password managers (1Password in my case), these categories cannot be added at all and you have to do it all manually. Without this feature I can't make a full-fledged transition.

Would not creating different vaults achieve this? For example, I've got a Work vault for all the passwords related to my job and a Personal vault for everything else. A separate New vault for used as a default place to store new credentials prior to sorting. And I plan on separating the Personal vault into a bunch of smaller ones. Money, Shopping, Gaming and so on.

Or am I using vaults wrong.