I always suspected that this was a limitation of iTunes that became a feature - because I never saw Apple call attention to it - but once I found it, it worked great.
When multiple playlists were placed inside a folder, that folder could be played as a playlist itself. The outcome was that I could make a few hundred smart playlists the resulted in a few songs apiece, and throw five of them at a time into a folder. Now I have an instant playlist of 25 songs that reflect my general preference without my having programmed it specifically. (The playlists might have been, say, the least-recently played top tracks of five different artists.)
I plan to post another comment about how I’d like to see metadata used to make something like smart playlists / Genius, but for this comment I’d just like to post that I found nesting playlists a really useful feature.
