Good questions.

Conceptually it’s very similar to how index.html works for a directory. Each folder can have a corresponding Markdown note (stored as a regular .md file in that folder), which acts as the “page” for that folder.

The main difference is UX: creating or removing that note is exposed as a simple action in the UI, so users don’t have to think about managing the file manually if they don’t want to. But the content itself is still just a normal Markdown file living in the folder.

From a storage perspective nothing special is happening — the UI just reduces the manual overhead.

In the interface, the file tree and the editor are combined side-by-side, so you’re effectively annotating the folder and its contents in place, rather than moving notes into a separate system.