Yeah sorry lol, I was not clear.
When I go to add a third app it just goes behind the folder. Tried a dozen times with different apps and only ever takes 2 per folder.
Just tried again and it let me do 4! Then the 5th just goes into its own folder and cant be added.
Thank you so much! A video speaks a million words and yours helped me to instantly identify what's causing this.
What happens is that when you remove apps from a folder until one is left, that app remains as a folder, and currently this launcher doesn't allow you to drag one folder over another.
A workaround is to tap that "folder" and drag that last app out from its "folder", into the other folder you want it to be in.
A fix for this is planned, thanks for highlighting this confusing behaviour ;)
Microsoft launcher is super underrated IMO. Lots of customization. I use it for my foldable, but it's a bit hit or miss sometimes (scaling of folders sometimes gets messed up going from open to closed).