We have a number of projects, and each lives deep in a folder structure. When one set of projects needs to reference a project in a different folder, the reference can fail
The max recommended project name length is 64 char. Team foundation server do not allow more than 64 char See the following link http://www.grabthecode.com/visual-studio/length-of-visual-studio-project-name
You can find the naming conventions laid out by Microsoft in the below link Microsoft Docs
Short answer - don't do that and it will not hurt. Consider less deep hierarchies and make related projects to live close.
MSBuild is managed application and CLR have restriction on path/file name length of about 256 characters...