New folder in the directory where the original image resides

<transformation postfix="_variations" name="images">
  <image finalName="icon.jpg">...</image>
  <image finalName="small.jpg">...</image>
</transformation>

Same directory for all the images transformed

<transformation target="/media/icons/" name="images">
  <image>...</image>
</transformation>

NB: you can also apply this technique on a per-file basis, by defining a directory for the icons, a directory for the full size versions, etc.

<transformation name="images">
  <image target="/media/icons/">...</image>
  <image target="/media/fullsize/">...</image>
</transformation>

NB: the target path is relative to the Files root