New convert from Windows so right now fighting through all the non-intuitive crap. I notice when in an application, when I go to open a file, it will automatically take me to a folder (I guess that is "finder"?), like the one that contains the file I used last.
What I've hilited in bold is actually called an "open dialog" or "file picker dialog". It is NOT called "Finder".
The Finder is an app. It appear when you click the desktop. You can tell it's active because the first menu, next to the

icon, will say
Finder in bold.
If you say "finder", everyone here will think of the Finder app, not the Open Dialog in an application.
How do I navigate UP in the directory hierarchy? In windows explorer/apps there is either a button with an up arrow in it or you can see your whole path so you can click to whatever part of the hierarchy you want to view. Are folder hierarchies irrelevant in MACs? What is the purpose of hiding where you are?
There is a popup control that shows where you are. It has the name of the folder. Click it and it will popup (expand) to show the path of folders leading to that point in the hierarchy.
There are also icons in the toolbar, to the left of the hierarchy popup, that let you change the view of displayed files. The icon view is a typical default. Other choices are the list view, column view, and cover flow view. In each case, you will be able to ascend the hierarchy using the popup, and the view in the content area will appear in list, column, or cover flow form. Ascending the hierarchy will cause some views (list, column) to display expandable folders or selectable folder columns.
If you need more explanation, please identify your OS version, and which application you are using the Open Dialog in. The OS version is relevant because view options and presentation vary by OS version. The application is relevant because some apps have heavily customized Open dialogs.
You might also
post a screen shot of the Open dialog you're having trouble navigating, and someone here can probably explain what the different controls are.