When you have many datasets to declare in each catalog, you can use nested datasets:

<?xml version="1.0" ?>
<catalog xmlns="http://www.unidata.ucar.edu/namespaces/thredds/InvCatalog/v1.0" >
  <service name="odap" serviceType="OpenDAP"  base="/thredds/dodsC/" />

  <dataset name="SAGE III Ozone Loss Experiment" ID="Sage III"> <!-- 1 -->
    <dataset name="January Averages" serviceName="odap" 
             urlPath="sage/avg/jan.nc" ID="jan.nc"/>  <!-- 2 -->
    <dataset name="February Averages" serviceName="odap" 
             urlPath="sage/avg/feb.nc" ID="feb.nc"/> <!-- 2 -->
    <dataset name="March Averages" serviceName="odap" 
             urlPath="sage/avg/mar.nc" ID="mar.nc"/>    <!-- 2 -->
  </dataset> <!-- 3 -->
</catalog>
  1. This declares a collection dataset which acts as a container for the other datasets. Note that it ends in a > instead of />, and does not have a urlPath attribute.
  2. These are the datasets that directly point to data, called direct datasets.
  3. This closes the collection dataset element on line 1.

You can add any level of nesting you want, e.g.:

<?xml version="1.0" ?>
<catalog name="Example" xmlns="http://www.unidata.ucar.edu/namespaces/thredds/InvCatalog/v1.0" >
  <service name="odap" serviceType="OpenDAP"  base="/thredds/dodsC/" />

  <dataset name="SAGE III Ozone Loss Experiment" ID="Sage III">
    <dataset name="Monthly Averages">
      <dataset name="January Averages" serviceName="odap" urlPath="sage/avg/jan.nc" ID="jan.nc"/>
      <dataset name="February Averages" serviceName="odap" urlPath="sage/avg/feb.nc" ID="feb.nc"/>
      <dataset name="March Averages" serviceName="odap" urlPath="sage/avg/mar.nc" ID="mar.nc"/>
    </dataset>

    <dataset name="Daily Flight Data" ID="Daily Flight">
      <dataset name="January">
        <dataset name="Jan 1, 2001" serviceName="odap" urlPath="sage/daily/20010101.nc" ID="20010101.nc"/>
        <dataset name="Jan 2, 2001" serviceName="odap" urlPath="sage/daily/20010102.nc" ID="20010102.nc"/>
      </dataset>
    </dataset>
  </dataset>
</catalog>