You can mark any Rem at all as a document, for instance by typing /document or pressing Ctrl+Alt+Shift+D (Cmd+Opt+Shift+D on a Mac). This has several effects which you can read about in the documents article. The main purpose of marking something as a document is to indicate that this is usually the level that you'll want to zoom into when working with the contents of that document. But if a document is in a folder or otherwise has parents, you can zoom out further to those levels, or you can zoom in to a child Rem of the document.
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Most people create a document for each lecture or article they take notes on, or each low-level topic they want to write or think about, then organize these documents into larger folders like “Chemistry” or “Programming Languages” or “Cities.”
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Here are some examples of documents that are not top-level Rems, using a knowledge base hierarchy based on the Johnny Decimal System (you can see the hierarchy of folders underneath each document name in bold):

A folder is similar to a document, but it serves only to organize documents. Folders can contain only other folders and documents, not other Rems.

A top-level Rem is any Rem that doesn't have a parent. Often, top-level Rems will be marked as documents or folders, but they don't have to be. For instance, if you create a new top-level Rem by pressing Ctrl+Enter in reference, tag, or global search, it won't be a document or folder.
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Many people like to create top-level Rems for named concepts or ideas that come up in a document they're writing but that they don't yet have much information about. If you do this routinely, you'll be able to see everywhere you referred to each concept through backlinks, and you'll have a place ready to put more information about it if you need it later.
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It can also be useful to hoist concepts that appear in multiple documents and sources into top-level Rems and then display them in each document through a portal.
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Here are some examples of top-level Rems that aren't documents: