A directory is another name for a folder. File systems use directories to organize files within a storage device, such as an HDD or SSD. For example, system files may be located in one directory, while user files may be stored in another.
While directories often contain files, they may also contain other directories, or subdirectories. The user folder, for instance, may include directories such as Documents, Pictures, and Videos. Each of these directories may contain files and other subdirectories. This resulting directory structure, represented visually, would look like an upside-down tree. The top-level directory of a volume that contains all other directories is aptly labeled the root directory.
The location of an individual file or folder within a directory can be represented by a directory path, such as C:\Program Files (x86)\Google\Chrome\Application\. As you browse through your file system, whenever you open a subdirectory, it is called "moving down a directory." If you open the folder that contains the current directory, it is called "moving up a directory."
Directory vs Folder
The terms "directory" and "folder" can be used interchangeably. However, folders are technically the visual representation of a directory. In other words, a folder is an icon with a name that represents a directory in the file system.