A directory is a file that holds other files and other directories. You can create directories in your home directory to hold files and other sub-directories.
Having your own directory structure gives you a definable place to work from and allows you to structure your information in a way that makes best sense to you.
Directories which you create belong to you - you are said to "own" them - and you can set access permissions to control which other users can have access to the information they contain.