As a Best practices you need to use the Index Column, this will help to improve the performance. You can have up to 20 Index column. Then you create Filter view Based on the Index column to quickly filter through large list.
In general, an index on a column enables you to quickly find the rows
you want based on the values in that column, even when working with
millions of items. When you combine indexes with filtered views, you
can quickly retrieve the items you want.
Although folders (also called containers) are not required to use large lists and libraries, you can still use them to help organize your data and improve the efficiency of your data access. When you create a folder, behind the scenes you are creating an internal index.
It is important to consider the following when you use folders to organize a large list or library:
- A folder can contain more items than the List View Threshold, but to
avoid being blocked, you may still need to use a filtered view based
on column indexes.
- If you choose the Show all items without folders option in the
Folders section when you create or modify a view in this list or
library, you must then use a filter that is based on a simple index
to ensure you don't reach the List View Threshold.
- It is often useful to make the default view show all the available
folders without any filtering so that users can choose the
appropriate folder when they insert new items. Displaying all the
folders also makes it less likely that items will be incorrectly
added outside the folders in the list or library. Note that, unlike
libraries, there is no automatic way to move items between folders in
read this for more information https://support.office.com/en-us/article/Manage-lists-and-libraries-with-many-items-b8588dae-9387-48c2-9248-c24122f07c59?ui=en-US&rs=en-US&ad=US