My playlists grew because I added stuff randomly not caring about folders. It got too big and all of it is tugged away in the left side. Perhabs add a folder icon infornt of folders.
Anyway, make the "Playlists" title double clickable to open in the right side where songs are displayed normally. That was the behaviour I expected.
Then while working in the right side you'll have options to open / close all folders. And display folders / songs, etc like you're used to in windows. As a list, cd covers, detailed but most idealy spread from left to right on your screen while working in the rightside of the screen.