I agree that tagging is useful and it’s more advanced feature, but it serves different purpose (than folders): connect (sometimes unrelated) knowledge in a non-hierarchical manner.
You can use tags to connect logically unrelated notes, e.g. by using “to-review” tag.
Or you can use nested tags for classifications: “year/2000”, “year/2001”.
Tags introduce more cognitive burden in your workflow, because of their dynamic(flexible) nature. A note is (usually) have a single folder, but can have multiple tags. It’s always easier to start with a folder, and add tags as needed.
Having a visual hierarchical(tree-like) structure (folders) is a standard way for representing digital information and it’s very intuitive. It became more obvious as you start accumulating hundreds of notes.
And, as @kissu noted, tags for “grouping” will work only for pretty simple knowledge bases. You can’t easily expand/collapse/reorder/copy/move/delete(with related notes) while maintaining your library, as you can do with folders.
And a folder will be easily accessible outside the app (e.g. for sharing).
Besides that, folder names often contains spaces, which is (usually) not applicable to tags.
One may say that there is a graph view available for visual representation, but I think it’s not suitable for daily usage, as it’s pretty clunky and doesn’t provide all the editing features of folders.