Is there a way to enable (or re-enable) subfolders in Apple Mail Favorites?

We may be talking about 2 different things here? I'll try to clarify...

I agree that you cannot add a sub-folder to the main "Inbox" for an IMAP account (where Inbox is the parent folder), although you can add other Mailboxes that will show on the IMAP server under a given IMAP account.

I'm focusing here on on accessing these other Mailboxes from the "All Inboxes" option under Favorites. As shown in the pics from my original posts (and the one added below), ALL folders for each root Account used to be quickly accessible here. This is how Apple Mail worked at least since OS X rolled around.

People with multiple Mail accounts now have to go down through the Sidebar to find the Mail account, then find the subfolder that used to be quickly accessible right at the top of the sidebar through Favorites->All Inboxes by clicking an arrow (see pic below). The loss of functionality is nonsensical and a major time-waster for those who receive a lot of email multiple times per day on multiple accounts. Alternately, adding every Mailbox into Favorites just creates a mess in Favorites.

It makes so little sense that it's gone that removal seems like a bug or an oversight. I've reported it to Apple under that premise.

I think this is dictated by the server. Further, as I saw your post come in, I was going to mention that the above info isn't quite accurate. Mail can and does allow creation of subfolders of the Inbox. This may be dictated by the server as well. While it shows in the attached image below as created on the Top Level, Mail actually creates a subfolder of INBOX.mbox in the Finder (~/Library/Mail/V10/XXXXXXX/INBOX.mbox/test.mbox). It appears both in Apple Mail AND on the Server. This hasn't been caused an issue for me in the past 15+ years between my current and previous hosts.

What is odd is that these default folders (that are subfolders under INBOX) should be accessible through the Favorites->All Inboxes method just as they always have been under Ventura/Mail 16.0 as well. The above really makes me think there is oversight/bug in the current version of Mail because I cannot see the subfolders as in that last picture in Mail 16.0.

FIRST...THANK YOU for all of the replies!

SECOND...GOT IT! All is showing correctly again. 🎉, but 🙄! In trying to explain further, I went back into Advanced IMAP Settings (as you had mentioned above). As a test, I removed IMAP Path Prefix "INBOX". I just set this machine up...so I don't know how that even got there. Exited, restarted Mail and BOOM...all subfolders appeared. Mailbox Behaviors already uses the "INBOX" prefix on each selection (i.e., INBOX/Drafts, INBOX/Sent, etc).

Issue of this thread is resolved, but a couple of outstanding things from the discussion...

1) Mail does let create subfolders within the Inbox (see below). Maybe your server doesn't allow it? I do see that I can't do the same for my iCloud account.

2) The Finder confirms all folders showing under my Adam IMAP are subfolders of the Inbox (also pictured below).

AGAIN...thank you for throwing a few things out that did help get this resolved!