Thank you for your feedback on the Outlook.com beta! We are considering this change and will reply back when we have an update.Neal supported this idea ·Neal commented
Organizing folders isn't smooth. Dragging a folder under a folder and making it a sub-folder is easy, but trying to reverse that accidental process is a pain. We have to delete the sub-folder and make a new one under the same name if we want it to be an independent parent folder of its own. We need smooth functionality to drag and organize folders, to reorganize the folders of how they're shown and so on.