How many libraries can a site have?

there is no issue with doing that, you can have millions of items in a site

the actual limits are listed at https://support.office.com/en-us/article/SharePoint-Online-limits-8f34ff47-b749-408b-abc0-b605e1f6d498

Folder are discouraged by many people because they just dumb containers in which things are stored, they don't provide any actual information about what is stored in a folder. You can put anything you want into a folder, which can be confusing, e.g, you can put an expense report into a resume folder and nobody will know. 

Using metadata to tag documents is preferred by many of us because it provides helpful information about the file that can travel with the file, be used to provide better search results and be enforced through the use of pick lists and data types.