Next to regular files are directories. From the perspective of an end user, a directory is a container that can contain either regular files or other directories. However, from the perspective of a system, a directory is really a special kind of file that serves as an index to find other files.
When you use a CLI, the CLI (called a shell) keeps track of a “current directory”. The current directory of a CLI defines where it “stands”. Without the concept of a current directory, every command that needs to specify a file needs to specify the full absolute path. With a current directory, then a CLI command can specify files “relative to the current directory”.
From the CLI, several things can be done to a directory: