Whenever you add a user to Ubuntu, either by installing Ubuntu or manually adding a new user, Ubuntu creates a /home/username directory for that user with their username. The /home/username directory is often referred to as just "the home directory".
The home directory is:
- Where your Desktop resides.
- Where your documents, pictures, music, videos, audio, and pretty much everything else can be stored.
- Where your application settings are stored, in hidden files and directories (their names start with a . ) that you should not touch unless you know what you are doing. Eg, /home/username/.thunderbird contains your Thunderbird emails and contacts, /home/username/.mozilla contains Firefox bookmarks, passwords, history, plugins…
- The only place (with the exclusion of removable drives and the /tmp directory) within the Ubuntu file system where a user can freely create/modify/remove files and directories without needing root permissions or the sudo command.
It's required to read https://help.ubuntu.com/community/HomeFolder for more information about home folder.