Playlists can be created/edited easily using Playlists|New Playlist to create a new playlist, or Playlists|Edit Playlist to edit an existing playlist (you can also drag files/folders onto the main window to quickly create a new playlist.) Existing playlists can easily be added to the playlist being edited.
The editor supports multi-level undo/redo, and also supports drag'n'drop so that you can easily add files by dragging the files and/or folders from the tree-view on the left (or from Explorer) onto the file-list on the right. Right-click on the playlist to get a menu of options for sorting the playlist etc. The buttons below the tree-view control how you are shown the tracks.