Folder

Technically, it's a place on your disk where the names of files, and other folders, are stored (alongside other information such as attributes and sizes). Think of it as a telephone directory, containing information about files and folders instead of about people and businesses. This analog gave rise to the folder's other (and earlier) name: directory.

Note: Although a folder "contains files", it really only contains information about the files, not the data stored in the files themselves. The files and their data are stored elsewhere on a disk.