If I may call you by your first name. You are getting there.
Let's see if I can answer your question without confusing you further. Let's say you have installed your system on a single partition that is 10 - 12 Gig. We will call that partition sda2. All the default folders in the file system are mounted or bound to sda2. When you made the install, those folders were populated with the appropriate files to make the system functional.
One of those folders is /home. It was part of the install and was mounted to sda2 also. In /home there is a folder for each user. In this case we will have one user, james. In the /home/james folder is where all your configuration files are for your desktop. A good example here would be your bookmarks for the browser. What we don't have in /home/james is a lot of space for you to put folders containing lots of data. We kept the install small so it would be fast and responsive. Also, it is safer and easier to upgrade if we keep our data completely out of the install.
Ok, Lets say that you had sometime in the past put all your pictures on a partition called sda5. And also you had another partition that contained all your multimedia on sda6. And another, sda7, that had all your documents on it. Ok, carrying this further, lets say you want easy access to this data from your home partition, just as if it really was there.
If you create a folder in your home called Pictures, you now have an empty folder mounted on sda2, but there is nothing in it. And we do the same with multimedia and documents. The folders live on sda2 but there is no data on sda2 that goes with these folders. They are just icons that you have created.
Now comes the part that makes the Linux file system so powerful and flexible. You can mount the Pictures folder to sda5. Now the folder is a portal to an entirely different partition, that just so happens to have your pictures in it. We can do the same thing for Multimedia, mount to sda6, and Documents, mount to sda7. The folder icons themselves live on sda2, but the data you are looking at and acting on in those folders is on a different partition that could be on another drive, another computer, or in a cloud somewhere over the rainbow.
Most of the folders in Linux can be mounted to wherever you wish them to be. The default folders as well as the ones you create. This has some very powerful implications and is one of the biggest reasons the Unix/Linux file system infrastructure is so flexible, and has been around so long, while other file systems seem to come and go. There may be something better someday, but it hasn't shown up yet.
Now... what are the advantages to this setup. Well first there is speed. The part of the system that we are most concerned about is small and the data is close together on the disk instead of being spread out everywhere. Secondly, all your important data is completely separate from your Linux install. If you decided to try another distro you could put it on the disk also and mount those same partitions in its' home too. You would then have your data easily available in either install.
Also, from an upgrade stand point of view, you could and I would make a backup folder on one of your data partitions and keep the few config files that you have in /home/james, just in case. Let's say you break your install. Just reformat and reinstall the base system, remount your data partitions in your /home and copy back your backed up config files. If you didn't have a lot of extra programs added, you are back in business, just as you were in less than 30 min.
I know this is long and I didn't mean for it to be, but I hope that answers your question. If not, post back and I will try again.