see screenshot

You can look at this extension:

• Add Bookmark Here 2: https://addons.mozilla.org/firefox/addon/add-bookmark-here-2/

I'm not aware of any way to lengthen that list. Perhaps there is an extension which can do it?

In case it's of any use:

When you use the next icon over to expand the full folder list, you can use the keyboard a bit to locate folders more quickly. For example, if you type f the next folder name starting with f will be selected. (This only works with the first letter, though, you can't spell out the beginning of a word.) If you type fairly quickly, you can spell out the beginning of the folder name, as noted below.

That is not really true, you can search for a name with more letters, but you may have to type subsequent letters fast enough to prevent Firefox from seeing them as the start of a new search (w3 brings me to the W3C and wi to WIKI folder).

Hi cor-el, you're right. Now that I try it again, I am able to type it fast enough. Or maybe the tree is expanded a bit differently this time.

It only works for names that are visible and not for folders that are collapsed.
This works the same way in the sidebar and other treechildren type panels.