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I am creating a modern SharePoint site as a documentation site for our end users. We want to create a basic hierarchy of folders and pages, and possibly pages with child pages.

📁Sales
    📄Creating a Lead
    📄Creating a Proposal
        📄Adjusting Prices
📁Administration
    📄Resetting Your Password

These are not intended to just be Word documents or other files sitting in a file directory, they're intended to be SharePoint modern pages. My questions for building and maintaining this hierarchy are:

  1. How do I create a nested pages, whether they're a child of just a folder/section or a child of another page? We don't want a flat list of pages.
  2. How do I display this hierarchy in the form of a sitemap in the main menu navigation dynamically without having to manually construct that hierarchy and edit it every time a new page is created?
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Solution for 1st question:

In SharePoint Online Modern Communication Sites, you can create a main menu with Nested links & sub-links and display the hierarchy in the form of a sitemap like shown in below image:

enter image description here

In SharePoint Online you can create either Header (without link) or URL for navigation to another pages/documents in your site. So you can create folders/sections using header and actual pages links using URL.

For Example: You can create Sales as a header which will not have any link associated with it and add nested sub-links Creating a Lead and Creating a Proposal under it as shown in image you attached.

According to Organize your SharePoint sites with megamenu navigation and new “change the look” options,

Navigation should always be planned from the perspective of the user of information – the visitors to your site. And why not present them with a beautiful, organized megamenu.

Note: the megamenu navigation layout is only available for horizontally oriented navigation's and allows for a panel display of links up to three levels.

Reference:

You can follow below article for more information about how you can create/move/order/remove links and sub-links in SharePoint:

Customize the navigation on your SharePoint site.

Answer for 2nd Question:

I am afraid but there is no OOTB way currently to add the newly created page under navigation (Any specific folder/section) dynamically. You have to manually add the links in navigation.

Additional Reference:

Planning is important while creating a navigation in SharePoint sites. You can follow below article to Plan Navigation for your modern SharePoint site:

Planning Navigation for the modern SharePoint experience.

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