I keep my playlists in folders and this looks like a UI bug. Steps:
1. Right click track
2. Add to playlist
3. View dropdowns for each folder, playlists in folders are missing. They are visible in the playlists panel.
UPDATE: Dragging and dropping DOES NOT WORK. Adding to nested playlists inside folders is officially quite broken. Please fix.
OS: Newest version of MacOS High Sierra