As of A21, and continuing on to the present, the preferred Mods folder below your APPDATA folder. For me:
C:\Users\zzton\AppData\Roaming\7DaysToDie\Mods
The game itself also has Mods folder in its files that includes mods that are distributed with the game. In that folder you'll find a 0_TFP_Harmony modlet that provides the hooks that modders often use. There's no reason to mess with that folder, but that is the "old school" location to put modlet. Some people still spread that folder name and use it, even though it is no longer the best location for us to use.