Why do people put xml sitemaps in subfolders? Why not just the root? What's the best solution?

[McTaggart]

Just read this: "The location of a Sitemap file determines the set of URLs that can be included in that Sitemap. A Sitemap file located at http://example.com/catalog/sitemap.xml can include any URLs starting with http://example.com/catalog/ but can not include URLs starting with http://example.com/images/." here: http://www.sitemaps.org/protocol.html#location

Yet surely it's better to put the sitemaps at the root so you have:
(a) http://example.com/sitemap.xml 
http://example.com/sitemap-chocolatecakes.xml
http://example.com/sitemap-spongecakes.xml 
and so on...

OR this kind of approach - 
(b) http://example/com/sitemap.xml
http://example.com/sitemap/chocolatecakes.xml and 
http://example.com/sitemap/spongecakes.xml

I would tend towards (a) rather than (b) - which is the best option?

Also, can I keep the structure the same for sitemaps that are subcategories of other sitemaps - for example - for a subcategory of http://example.com/sitemap-chocolatecakes.xml I might create http://example.com/sitemap-chocolatecakes-cherryicing.xml - or should I add a sub folder to turn it into http://example.com/sitemap-chocolatecakes/cherryicing.xml

Look forward to reading your comments - Luke

[HiveDigitalInc]

Consider this:  "The location of a Sitemap file determines the set of URLs that can be included in that Sitemap. A Sitemap file located at http://example.com/catalog/sitemap.xml can include any URLs starting with http://example.com/catalog/ but can not include URLs starting with http://example.com/images/." here: http://www.sitemaps.org/protocol.html#location

B would not be an acceptable approach as http://example.com/sitemap/chocolatecakes.xml could only contain a sitemap of content located in http://example.com/sitemap.   For this same reason, you couldn't create sitemaps in subfolder directories...

This is the best approach from those options you mentioned...

(a) http://example.com/sitemap.xml 
http://example.com/sitemap-chocolatecakes.xml 
http://example.com/sitemap-spongecakes.xml
http://example.com/sitemap-chocolatecakes-cherryicing.xml

It is worth noting that you can have a sitemap of sitemaps.. so for example.

http://example.com/sitemap.xml could contain links to http://example.com/sitemap-cakes,  http://example.com/sitemap-articles, etc..
http://example.com/sitemap-cakes.xml could contain links to http://example.com/sitemap-chocolatecakes.xml, http://example.com/sitemap-vanilla-cakes.xml, etc..

Try not to over-complicate things by trying to create sub-category sitemaps, etc.. Unless you have an exorbitant amount of sub-category pages, or have directories/sections managed by different cms, etc.

You generally see large sites will have a separate sitemap based on content type (company pages, category pages, product pages, blog pages)

[McTaggart]

Thanks Angular Marketing, and Everett... very helpful feedback and much appreciated. Luke