I think it does this...if you select Playlists from the on screen menue and then hold down the down key it will drill down to the last playlist selected. Then buy hitting the little round button it will then 'drill up'. Thus, if you have a playlist for rush, with each album separately listed, you can drill down as noted above, then drill up and it will let you select the album you want.
I have all of my songs in playlist by the first letter of the first name of the artist. Then I have each CD within each of these playlists...very very simple and effective system!
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...One man gathers what another man spills