firefox = {
      profiles."user" = {
        bookmarks = [
          {
            name = "Toolbar folder";
            toolbar = true;
            bookmarks = [
               {
               name = "nix folder";
               toolbar = false;
               bookmarks = [
                  {
                    name = "NixOS Search";
                    url = "https://search.nixos.org/packages";
                  }
              

On phone so testing or reading source is a bit tough, but maybe nesting folders like the above work?

Make this the toolbar directory. Note, this does not mean that this directory will be added to the toolbar, this directory is the toolbar.

https://github.com/nix-community/home-manager/blob/master/modules%2Fprograms%2Ffirefox.nix#L425-L427

If you open the bookmarks utility in firefox, does it show as a folder as expected? I think maybe toolbar should be false if you expect to see your folder on the toolbar