Some mods are not working with the latest version of fabric. Indium is one of them. I am able to use terralith, sodium, and iris. I have tried adding continuity and Indium and receive this error. I do have fabric installed and like I said it does work with other mods. I am running MC 1.18.

net.fabricmc.loader.impl.FormattedException: net.fabricmc.loader.impl.discovery.ModResolutionException: Mod resolution encountered an incompatible mod set!
A potential solution has been determined:
- Install fabric, any version.
- Install fabric-renderer-api-v1, version 0.3.0 or later.
Unmet dependency listing:
- Mod 'Continuity' (continuity) 1.0.3+1.18 requires any version of fabric, which is missing!
- Mod 'Indium' (indium) 1.0.2-alpha1+mc1.18 requires version 0.3.0 or later of fabric-renderer-api-v1, which is missing!
Inactive mods:
- mod 'Fabric Resource Loader (v0)' (fabric-resource-loader-v0) 0.4.11+3ac43d9514, reason: newer version active
at net.fabricmc.loader.impl.FabricLoaderImpl.load(FabricLoaderImpl.java:188)
at net.fabricmc.loader.impl.launch.knot.Knot.init(Knot.java:142)
at net.fabricmc.loader.impl.launch.knot.Knot.launch(Knot.java:71)
at net.fabricmc.loader.impl.launch.knot.KnotClient.main(KnotClient.java:23)
Caused by: net.fabricmc.loader.impl.discovery.ModResolutionException: Mod resolution encountered an incompatible mod set!
A potential solution has been determined:
- Install fabric, any version.
- Install fabric-renderer-api-v1, version 0.3.0 or later.
Unmet dependency listing:
- Mod 'Continuity' (continuity) 1.0.3+1.18 requires any version of fabric, which is missing!
- Mod 'Indium' (indium) 1.0.2-alpha1+mc1.18 requires version 0.3.0 or later of fabric-renderer-api-v1, which is missing!
Inactive mods:
- mod 'Fabric Resource Loader (v0)' (fabric-resource-loader-v0) 0.4.11+3ac43d9514, reason: newer version active
at net.fabricmc.loader.impl.discovery.ModResolver.findCompatibleSet(ModResolver.java:183)
at net.fabricmc.loader.impl.discovery.ModResolver.resolve(ModResolver.java:48)
at net.fabricmc.loader.impl.FabricLoaderImpl.setup(FabricLoaderImpl.java:222)
at net.fabricmc.loader.impl.FabricLoaderImpl.load(FabricLoaderImpl.java:186)
... 3 more

Yes, that's correct. You do need the API in the mods folder; the .fabric folder is for Fabric loader only.

So I am dumb. I am new to fabric. Been using forge and optifine, but wanted to try fabric and some of its mods. I didn't realize that fabric loader and fabric API are separate. I added the actual API to the mod folder and this fixed it. It is a little confusing that both are referred to as fabric. Terralith worked so I guess it only needed the loader and not the API. Or is this wrong because there is a .fabric folder in the minecraft folder near mods. Do I not need the mod file in the mod folder or should the fabric loader jar file install this?