Well, that's not really my problem. It's taken a few years but I now organize things with an eye to what Kodi likes. What I use the Videos button for is those files that fall outside the easily indexed media content, like commercial movies, TV series, CD Music, etc.
Things like sporting events, miscellaneous videos and videos clips are unindexed and I access those using the Video button, and there aren't that many folders, maybe 5. To be sure, there are subfolders, but the parent folders are the source for all of this content and I'm happy with these 5 parent folders. And these 5 folders have been added to Kodi as sources with the type "None" and excluded from Kodi's scanning.
Everything works fine as it is, but when the user clicks the Videos button, he/she sees the sources for Movies, TV shoes, Music Videos, etc and it's tempting to launch everything from that list instead of the main menu. I'd just as soon keep prying eyes away from there if I can. (I'd even like to "hide" selected sources from the average user, but I can't see a way to do that.)
So one solution is to create sub menus for the Video button just like for Movie sets. So I go into Settings | Menu | Video | Submenu and see a list of 5 Folders and 3 favorites. It seems intuitive that since I have folders I should select Folder 1. Even more intuitively Kodi prompts me for the SOURCE NAME (let's call it Sports). At this point I am sure I am doing everything properly. Typing in Sports for both names does indeed create a submenu button but it does not open the source. It opens to a list that I haven't run across, but that it of no use to me (see my first post).
If, however, I add the Sports source to my Favorites, I can simply add that favorite to one of the three submenu items and Voilà! But there are only 3 favorite submenu items.
So what the heck are the Folder 1-5 submenu items for