It's odd that there is the "bookmarks menu" on the drop down and another list of BOOKMARKS when you click the little bookmark icon. I don't understand why there are essentially two groups of bookmarks, depending on where you click. I'm not sure what the objective is.
I put daily use bookmarks in the Bookmark Bar
I put frequently used, but not daily bookmarks in the Bookmark Menu
I put nice to have, but not used often at all bookmarks in other folders inside the "Bookmarks" area (shown in Show All Bookmarks).
Works for me.
I've been putting the hard to reach Bookmarks area bookmarks in Pinboard instead. As they're usually situational bookmarks and not something I expect to really need right on the computer.
But, for those not using that type of bookmark system, the hard to reach bookmarks area is a good place for long term storage.