The file tree is a click and drag interface, so to move a file, left click and hold on the file you want to move. While holding the mouse button down, drag the file up or down in the tree to where you want it.
To make a file the child of another file:
Click and hold on the file you wish to move to another menu level.
When you move it up or down the tree, the selected page will become a gray box.
When the box goes on top of files in the tree, they will become bold.
When the file that you want to be the parent is bold, let go of the mouse button.
The file name will reappear branched off of the parent file.
In order for the change to take effect on the web site, the Generate Menus button in the Control Panel will need to be clicked.