Files and folders are used to organize data on a computer. A file is a collection of data that is stored together and can be given a name, type, and location. Files are organized into folders, also called directories, to further group them together. The location and name of a file, including the file type extension, allows the computer to identify and retrieve the correct file when needed. Maintaining an organized folder structure with descriptive file names is important for efficiently finding and working with files on a computer.