How it displays a compilation/soundtrack depends on the 'artist' you put it under. if you put it under a generic artist like 'Various Artists' or 'Soundtracks', then that is what it will be found under in the folder.
Once a file is loaded the player will look at and show the ID3 information in the file, no matter where in the folder structure it is. So if you have the soundtrack for Better Off Dead and you have it in a "80s Soundtracks" folder, you would find Howard Jones's Like To Get To Know You Well in Indexes->#->80s Soundtracks->Better Off Dead. However, once you started playing it, it would look at the ID3 and in the "Now Playing" part of the page, show "Howard Jones".
The "Indexes" is your folder structure as-is. Best to put your files where you want or expect to find them later.
Some apps (like SubFire, end shameless plug

) will allow you to see the folder structure as-is AND view it by artist-album regardless of the folder structure. Others only can handle one or the other (folder structure as-is OR artist according to ID3). The standard android app only goes by folder structure or the album views that the web ui's home page supports (recently added, recently played, etc).
In some of my folders, I keep the artists sorted at the top level, like my "Rock AOR" has folders for Pink Floyd, Rush, Kansas, etc. The basic Artist/Album structure that you describe.
In other cases, it is more complex. My folk-celt collection (which is HUGE, admittedly) is divided up by national style, so I have under it "Irish", "Scottish", "Breton", "DC Local", and "New Age" (the latter for artists like Enya), and then more divisions under that based on families of performers. E.g., I have a 'Fraser' folder under Scottish for everything related to Scottish fiddler Alastair Fraser who has had many collaborations over the years. Complex, but that is how I think about my celtic collection, so that is where I expect to find the file, so that is where I put it.
So really, there is no set rule. Put it where you expect to find it later. You may find in a deeper structure like I describe for my Celtic collection, the transitional folders that the "Artist Info" is wrong, but over time you can learn to ignore it. When SubFire loads artist info, it only does it for the song currently playing so it always gets it right (well, almost always).