A computer can be thought of as a set of hardware (processor, memory, storage, network) that operates using software (documents, programs, data, etc). The software on a computer is made up of files, organized into a hierarchal directory (folder) system. Another name for directory (original name) is folder (newer name), but they both refer to the same thing.
At the top of this hierarchy is the root directory. Below the root directory is an area where the user can store their files and sub-directories, called the users "home" directory, which is named the same as the user's username. This offers an opportunity for the user to organize their files into directories that are named according to their use or type. Here is an example of a users home directory showing some sub-folders:
└── scout
├── Documents