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 Access 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.
