From what I can tell it's literally drag-and-drop, no different from any other GUI filesystem. It has search too, but not instead?
Files and folders that are shared with you show up by default only in your "Shared with me" folder, but you can still drag them anywhere into your own folder structure in Drive, and they work like a shortcut.
This here is exactly the problem; it makes folders useless in a team setting. A colleague creates a document and files it under "Project Name/Engineering/Architecture/". She then shares it with me, we have a bit of a chat about it, and move on. A week later, I try to find said document, but it is not in "Project Name/Engineering/Architecture/". Was I supposed to file it there myself? What about the other ten people it was shared with?
My "Shared with me" folder has a thousand items and no useful structure.