The support article should specify that folders only support playlists which have been downloaded to your local device. Streamed playlists are not supported (i.e., via Apple Music subscription). Once I downloaded all the songs in a playlist, I was able to move the intended playlists to the playlist folder as expected and as described in the support article. I really don't see the purpose in requiring a download, in a cloud native environment like an Apple Music + subscription, that should not be necessary.
Apple Music Curated playlists like Deutschrap 100 or Bastille Essentials can't be moved to a playlist folder even if all songs are downloaded. I'm sure it's a feature and not a bug. Of course you can duplicate these auto updating playlists and then move the copy to the playlist folder, but I'm guessing that precludes receiving of updates that the original playlist receives.
Also sometimes as you add new folders, the Music app will remove all the contents from the folder, create duplicate folders, and restructure your folder hierarchy -- all automatically. Again, with features like this, who needs bugs! It's amazing, a waste of time, clear indication of poor test coverage at both the unit and integration levels. Music is far better user experience than iTunes, but it needs some love, Apple. It's not the bastion of intuitive UX that delights users hearts.