Placing downloaded and custom modules in the root modules directory separates downloaded and custom modules from Drupal core's modules. This allows Drupal core to be updated without overwriting these files.
You may create subdirectories in this directory, to organize your added modules, without breaking the site. Some common subdirectories include "contrib" for contributed modules, and "custom" for custom modules.
Note that if you move a module to a subdirectory after it has been enabled, you may need to clear the Drupal cache so it can be found.