You can set permissions on one specific document or folder, you need to make sure that the path to the document is also accessible.
A quick way to set valid permissions, is to click on the View online icon next to the highest parent level, and to disable access on the folders and/or documents that you don't want to give access to. Click here to read about the warning triangle that indicates deviating permissions.
When a folder or document is added, the default behavior is that the permission is inherited from its parent folder.
In this example the subfolder 5.3 Permits is the only folder that needs to be visible for the role Environmental. To grant permissions folder 5 needs to be accessible too. Folder 5 and folders 5.1 and 5.2 have deviating permissions from its parent level. That is why these folders show a warning triangle.