Git is a content tracking system. When Git places a file into the object store, it does so based on the hash of the data and not on the name of the file. If two separate files have exactly the same content, whether in the same or different directories, Git stores a single copy of that content as a blob within the object store. Git computes the hash code of each file according solely to its content, determines that the files have the same SHA1 values and thus the same content, and places the blob object in the object store indexed by that SHA1 value. Both files in the project, regardless of where they are located in the user’s directory structure, use that same object for content.

Git can be enabled on a specific folder/directory on your file system to version files within that directory (including sub-directories). In git (and other version control systems) terms, this “tracked folder” is called a repository.