I did try to not use folders, but could not. Somehow, my mental structure works that way. Still, I think it depends on how you use them. I just have a handful of very high level folders for the big parts of my life I usually compartimentalize anyway, but it is flat otherwise, no subcategories,etc. Semantic connections across those folders, when the need arises, are done with links and tags. I use dataview sparingly. To me, the most attractive feature of Obsidian is the fact that, at the end of the day, all the notes are plain markdown files. Having used different note taking apps for decades now (I have notes from the late 90s still around, which I kept migrating from tool to tool), to be stuck in a proprietary format (or requiring special rendering, as is the case) would be a showstopper.
Still, the most beautiful thing about Obsidian, I think, is it’s ability to support a myriad organization styles, matching different people’s cognitive styles!