/ app - is where the application resides
/ app / etc - is global configuration den
/ app / code - is where modules installed their models and controllers
/ app / code / core - are core team developed or certified modules
/ app / code / community - are community contributed modules
/ app / code / local - are local customizations
/ app / code / core / Mage - magento default namespace
/ app / code / core / Mage / {Module} - module root
/ app / code / core / Mage / {Module} / etc - module configuration
/ app / code / core / Mage / {Module} / controllers - controllers provided by module
/ app / code / core / Mage / {Module} / Block - Block logic classes
/ app / code / core / Mage / {Module} / Model - Object Models provided by module
/ app / code / core / Mage / {Module} / Model / Mysql4 - Resource Models provided by module
/ app / code / core / Mage / {Module} / sql - sql installation and upgrade files between module versions
/ app / code / core / Mage / {Module} / sql / {resource} / - resource model specific upgrades
/ app / code / core / Mage / {Module} / sql / {resource} / {type}-{action}-{versions}.(sql|php) - resource update files. example: mysql4-upgrade-0.6.23-0.6.25.sql
/ app / design - is location of design packages (layouts, templates, translations)
/ app / design / {package} / {theme} - theme customizations
/ app / design / {package} / {theme} / layout - .xml files that define block structure for different cases in website flow
/ app / design / {package} / {theme} / template - .phtml (html with php tags) templates
/ app / design / {package} / {theme} / locale - Zend_Translate compatible translation files for package/theme
/ app / locale - locale files

/ app / locale / {locale (en_US)} - Zend_Translate compatible translation files for modules

/ skin / {package} / {theme} / - is where design package css and images are
/ lib - are libraries such as Zend and Varien
/ js - are javascripts smile
/ media - uploaded files (product images, pdf documents, etc)
/ tests - Unit tests (not done yet)
/ var - temporary files

[tag]Magento folder[/tag]