Everything that you use or save on a computer is stored as a file on disk drives of some sort. Programs are stored as files. Other types of information, such as word processing files, spreadsheets, and photographs, are stored as files, too. In fact, Linux organizes every resource (except network connections) as a file. All of these resources together are considered a file system.
Linux interacts with all devices as if they are files. For instance, your hard drive is viewed as the file /dev/hda or /dev/hdb. Each file is actually the IDE interface of the first and second hard drive, respectively.
Directory rules
Files are stored inside directories. Directories are actually files themselves whose sole purpose is to allow files to be logically organized.
Linux directories are like Windows folders.
There's no requirement that any particular files have to be located in any particular directories. However, all Linux computers adhere to conventions that provide these general organization rules:
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