Will this work if I drag folders into the folder, or only files? I got a Mac mini, want to manually transfer all files from 2017 iMac; what's the best way to get all my iTunes music into Music?
Yes, you can drag files or folders into the 'Automatically Add...." folder (do this while Music is running) and in a short while it will add them to your library. Anything that is non addable (such as photons in the same folder) will get placed in a "Not Added" folder.
If you upgrade from a pre-Catalina release to Catalina or Big Sur, Music will pick up your existing iTunes library. Otherwise, you can just take your files and add them yourself, as above.