Basic Overview of Picasa
While your photos are displayed in Picasa, they aren't actually stored in the application. When you install Picasa, it scans your hard drive and organizes the photos that are already on your computer by placing them into folders. These folders, along with the albums you create, make up the organization of your photos within Picasa.
Folders represent actual folders on your computer's hard drive that contain photos. In general this represents the root folder of MY PICTURES .
Changes you make to folders in Picasa will affect the matching folders on your computer’s hard drive.
Moving a photo from one folder to another in Picasa will also move the photo in Windows Explorer.
Edits you make to photos within Picasa will only affect the photos in MY PICTURES when you have selected the SAVE TO DISK. A copy of the original photo (pre edits) will then also be saved in a special folder named Original. The Folder Original is marked as a Hidden Folder and this setting can be changed in the Folder-View Option under Windows Explorer. Picasa will never Index the Original Folder.
Albums, unlike folders, exist only in Picasa. For example, you might create an album called ‘Pictures with Grandma,’ and include photos featuring Grandma from different folders to be used in a photo collage or to be shared online. Unlike Picasa folders, your albums don't correspond to real folders on your hard drive -- so when you delete or move photos from an album, the original files remain in their original locations on your hard drive.
New Features in Picasa 3