When you save a document to your hard drive, it becomes a file. A file has two important features. First, it has a name so that you can tell it apart from other files. Second, it has place to live, like a home address.
A folder, unlike a file, is a storage unit or container. Like a file, it also has a name. A folder is not a file, but it can contain files. It is just like a paper folder where you store your important paper documents such as your paid bills.