The labeling on the FC7 goes back decades, so quite honestly I wouldn't pay it any attention at all. What you set the switches to do is very much up to you and what you need most. But, as I mentioned, there's only ONE 'global' setup for it, which very much reduces its usefulness.
Personally, when using the FC7 for arranger use, I like SW's 1-4 for Variation selection (with Auto-fill ON) SW's 5&6 for Perf Up/Down and SW7 for Break/Mute. But your needs may differ from mine.
If you use the Key Audio for adding say a percussion loop as a sort of multipad, you might want a couple of switches to trigger those, or you've got to use keys at the top of the keyboard, and you run the risk of accidentally hitting them!
My songlist is only about 400+ songs, so currently I only use the one main Performance List for my solo shows, but I have several others that I'll use with bands, duo's, of holiday type music (Xmas, Mardi Gras etc) or specific functions (snowbirds, weddings etc).
As to organizing the data in the Songs folder, I keep EVERYTHING in different folders while I'm working on it, but as soon as I'm ready to perform it, I'll move it to the root level and then create the Performance using the file at the root level. This means if I edit it on the gig and want to 'replace' the file, I only have to navigate to the root level, not hunt around in myriads of sub-folders to find it...
As you've gone with the numerical system, I think you should concentrate on your laptop as the 'organizer' if you want genre specific lists or stuff like that. I embed all my lyrics into either the SMF or the .mp3 so the only songs I need lyrics for are songs I play with no backing, and I just use my iPad for those with a Bluetooth page turner to scroll if needed.
There's a little trick you can try with that as well if you find yourself just needing a few words to trigger your memory rather than the complete lyrics. Create a blank SMF of say 5 bars long. Then embed the words you need at Bar1 for first verse (you'll quickly find out if it's too many for the page to display) bar2 for chorus, bar3 next verse etc.
Now set up markers for Bar2, Bar3, Bar4 and Bar5. Now the Marker buttons can jump you to each 'page' even if the SMF is not playing..! It's not a LOT of text on each page, but it might be enough to trigger your memory. I often find that the first line of each section is enough to jog my memory..!
I'm not a big fan of reading off of laptops etc when playing, I'm old school, few entertainers read while they played back in the day. The audience likes to see you looking at THEM not buried in a screen! Plus they block the audience's view of you...
If you're on a Mac, I use a program called QMIDI to embed lyrics into SMF's and .mp3's. There's are several on Windows that can do this. The biggest advantage to doing this is that your Performance now calls EVERYTHING... resource (style/SMF/MP3), keyboard sounds AND lyrics!
Currently I don't bother with exact numericals, I just keep things in alphabetical order and then I know roughly where 100/200/300 etc put me in the list, and then scroll from there. It's quick enough unless I'm trying to medley..!
Hope some of this helps. You'll quickly find what works best for you..!
_________________________
An arranger is just a tool. What matters is what you build with it..!