"Music Library" apps sift through your directories, find your music files, and use filenames and ID3 tags to organize them by Artist, Album, Title, Genre, and other parameters. Some "Library" apps will immediately start searching as soon as you install and open them. Rhythmbox is more well-behaved, and won't do that until you add a "folder" to its list.
However, as far as I can tell, it will only sort music and generate playlists according to those categories.
I have my music files, OGG and MP3, organized into directories. These directories are based on my own peculiar categorization: "Protest Songs." "Music for the End of the World". "Filk Songs." "Soundtrack for Mage: the Ascension." "TV Theme Music." "Soundtrack For My Unfinished Webcomic." Some songs fit into more than one category, and hence can be found in more than one directory.
Rhythmbox will not recognize my organization. Rhythmbox will let me dump the contents of a directory into a playlist, but will not let me change the order of the songs unless it's by Track Number, Title, Genre, Artist, Album or Time. If I add songs from another directory, it will only integrate them into my list. If I added all my music to its library, I would have a mess.
I certainly wouldn't have what I wanted to listen to.
I have more control over my CD player.
The Totem Media Player also comes with Ubuntu. Despite being primarily a video player, it allows me to make spontaneous mix lists with a minimum of hassle. Still, it's a kludge. I'd prefer dedicated music software that gave me more flexibility.
I know the "mix tape" is considered something of a street-level art form these days. Surely, there has to be some Linux-compatible software that lets you make them?