When creating a repository on our central server, do I need to create the folder structure of trunk/branches/tags or does Mercurial take care of all that?
When creating a repository on our central server, do I need to create the
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Nope, don’t do it.
You don’t need them in Mercurial.
Edit: in Mercurial, tags and branches are first-class citizens. They get treated differently, whereas they’re pretty much the same in Subversion.
You might want to read about branches and named branches, and also this discussion here on SO.