Windows.ApplicationModel.Package.Current.InstalledLocation will give you the 'file system' defined by the application package, so you'd see you the commonly used Asset folder, for instance, via the URI ms-appx:///Assets
Anything accessed via InstalledLocation or the ms-appx
scheme is read-only because it's defined by the project you deployed from Visual Studio.
ApplicationData.Current.LocalFolder allows you to access the 'file system' owned by the current application/user (and stored at %AppData%/Local/Packages/<yourapppackage>/LocalState
). You can create whatever structure you want here to manage your various roles, and use the ms-appdata:///local/DirLeve1/DirLeve2/File3
URI to access your files). That storage is retained through updates to your application, though, of course, you'll need a strategy for updating whatever stored data formats are required to interact with the newer version of your application.
It sounds like you're assuming LocalFolder cannot contain a folder hiearachy; it can, and so you could have a Recents subfolder for instance under the LocalFolder reference and handle things that way.