The Linux filesystem explained

/sbin - This directory contains all the binaries that are essential to the
working of the system. These include system administration as well as
maintenance and hardware configuration programs. Find lilo, fdisk, init,
ifconfig etc here. These are the essential programs that are required by all the users. Another directory that contains system binaries is /usr/sbin. This directory contains other binaries of use to the system administrator. This is where you will find the network daemons for your system along with other binaries that only the system administrator has access to, but which are not required for system maintenance, repair etc.

/bin - In contrast to /sbin, the bin directory contains several useful
commands that are used by both the system administrator as well as
non-privileged users. This directory usually contains the shells like
bash, csh etc. as well as much used commands like cp, mv, rm, cat, ls.
There also is /usr/bin, which contains other user binaries. These binaries on the other hand are not essential for the user. The binaries in /bin however, a user cannot do without.

/boot - This directory contains the system.map file as well as the Linux
kernel. Lilo places the boot sector backups in this directory.

/dev - This is a very interesting directory that highlights one important
characteristic of the Linux filesystem - everything is a file or a
directory. Look through this directory and you should see hda1, hda2 etc, which represent the various partitions on the first master drive of the system. /dev/cdrom and /dev/fd0 represent your CDROM drive and your floppy drive. This may seem strange but it will make sense if you compare the characteristics of files to that of your hardware. Both can be read from and written to. Take /dev/dsp, for instance. This file represents your speaker device. So any data written to this file will be re-directed to your speaker. Try 'cat /etc/lilo.conf > /dev/dsp' and you should hear some sound on the speaker. That's the sound of your lilo.conf file! Similarly, sending data to and reading from /dev/ttyS0 ( COM 1 ) will allow you to communicate with a device attached there - your modem.

/etc - This directory contains all the configuration files for your system. Your lilo.conf file lies in this directory as does hosts, resolv.conf and fstab. Under this directory will be X11 sub-directory which contains the configuration files for X. More importantly, the /etc/rc.d directory contains the system startup scripts. This is a good directory to backup often. It will definitely save you a lot of re-configuration later if you re-install or lose your current installation.

/home - Linux is a multi-user environment so each user is also assigned a specific directory which is accessible only to them and the system
administrator. These are the user home directories, which can be found
under /home/username. This directory also contains the user specific
settings for programs like IRC, X etc.

/lib - This contains all the shared libraries that are required by system
programs. Windows equivalent to a shared library would be a DLL file.

/lost+found - Linux should always go through a proper shutdown. Sometimes your system might crash or a power failure might take the machine down. Either way, at the next boot, a lengthy filesystem check using fsck will be done. Fsck will go through the system and try to recover any corrupt files that it finds. The result of this recovery operation will be placed in this directory. The files recovered are not likely to be complete or make much sense but there always is a chance that something worthwhile is recovered.

/mnt - This is a generic mount point under which you mount your filesystems or devices. Mounting is the process by which you make a filesystem available to the system. After mounting your files will be accessible under the mount-point. This directory usually contains mount points or sub-directories where you mount your floppy and your CD. You can also create additional mount-points here if you want. There is no limitation to creating a mount-point anywhere on your system but convention says that you do not litter your file system with mount-points.

/opt - This directory contains all the software and add-on packages that are not part of the default installation. Generally you will find KDE and StarOffice here. Again, this directory is not used very often as it's
mostly a standard in Unix installations.

/proc - This is a special directory on your system. We have a more detailed article on this one here.

/root - We talked about user home directories earlier and well this one is the home directory of the user root. This is not to be confused with the system root, which is directory at the highest level in the filesystem.

/tmp - This directory contains mostly files that are required temporarily. Many programs use this to create lock files and for temporary storage of data. On some systems, this directory is cleared out at boot or at shutdown.

/usr - This is one of the most important directories in the system as it
contains all the user binaries. X and its supporting libraries can be
found here. User programs like telnet, ftp etc are also placed here.
/usr/doc contains useful system documentation. /usr/src/linux contains the source code for the Linux kernel.

/var - This directory contains spooling data like mail and also the output from the printer daemon. The system logs are also kept here in
/var/log/messages. You will also find the database for BIND in /var/named and for NIS in /var/yp.

reference: http://www.pathname.com/fhs/pub/fhs-2.3.html