To further explain, I want to set up multiple local folders on my laptop hard drive so I can put the emails in organized archives and I want to be able to read them at any time. It seems like when i go to Account Settings and Local Folders, I don't have the option to create as many local folders as I want. Why?

Local folders is a special acocunt for local storage. there is no practical limit in how many sub folders you can create, but you only get on "special account"

I would expect that to do this you are using a POP mail account to download email to Thunderbird and are using appropriate settings on gmail (browser) to allow the delete commands from Thunderbird to work, and appropriate settings in thunderbolts account settings on server side retention (immediate deletion after 14 days etc.

Note that using the GMail takeout service to actually get all your mail in one go and then deleting the gmail accounts contents is perhaps the best approach. You can use the import export tools to import the MBOX files gmail creates in the takeout process. https://addons.thunderbird.net/en-US/thunderbird/addon/importexporttools-ng/?src=ss