Various stuff lives various places in /, but there are lots of good online resources about what goes where; the relevant ones for your question are /home, which has users' home directories, and /media, where removable media shows up.

On going into xterm, you start in /home/user; this is the home directory of the user "user"; that's you.

In /media, there's mmc1 (external) and mmc2 (internal).

This next bit is not obvious to anyone well versed in Linux; this is maemo-specific:
/home/user/MyDocs is the main folder, known by your machine's name, in the maemo filemanager. Below it are several hidden directories (In UNIX, a file is hidden by starting its name with a dot.) which are your documents, sounds, etc. folders. They're hidden so that the file manager can fake in an entry with an internationalized name without both the translated name and the original showing up.

You can use cd to change directory, and ls to list files. ls -a lists all files, even hidden ones.

So puts you in your internal SD card.takes you home, but there's also a shortcut: you can use ~ to represent the current user's home directory. Once you're in ~, you can and you'll see .documents, .games, etc.