AFAIK that’s not entirely correct.
Once you have found, created, or downloaded your desired output profile, you only have to put it in the folder set in your Preferences.
Obiously there are default locations for color profiles, but we are not talking about standard/default profiles here, so the most convenient way to manage your custom profiles is locating them wherever you see fit. AKA the folder specified in the Directory containing color profiles setting.
And if I’m not wrong, all profiles placed in that folder will be shown in both the input and output profiles comboboxes, but no profile will be shown from any subfolder inside that one.
In my very personal opinion, there’s a much better explanation about color management in the Spanish RawPedia Color Management page, where everything is explained step by step and in a much simple way. However, it is indeed a bit outdated (I can think about where to find Nikon profiles, or a few nonworking links, for example) and there are a lot of technical terms everywhere, so I’m not really sure how online translators will work here…