@Rob_Brown I’m asking myself the same question. I need virtual folders or whatever you want to call them.
It seems that digiKam 7 understands the albums to be the same thing as the files and folders on the HDD.
In other words: When I delete an album in digikam 7 I also delete the same folder on my HDD.
My system is Linux Mint 19.3 or whatever the latest version is.