Getting to understand how Lightroom works can be a bit frustrating if you are not accustomed to how a database functions. Lightroom does not actually store your files, they are on your hard drive. Lightroom is a catalog/database that references those files to make it easier for you to find them, and to provide processing information for those files when you export them.
Think of Lightroom as a card catalog in a library. There are no books in a card catalog, just the information about the books, and where to locate them. This is metadata. The key to understanding this is in the Import dialog.
When you open the Import dialog the screen changes to a full view that defines the process from left to right. On the left are the possible sources for incoming images, such as your computer’s hard drive, external drives, or a card reader. When you select a source the available images appear in the center window.
At the top of the window is the method of importing the files. Add is the default and it simply means that you will add those images to the Lightroom catalog from where they are and leave the original files there. This would be used if you have already imported files to your hard drive from your camera or a card reader, or you wish them to be managed from where they are (an external drive). Nothing really changes except that Lightroom can now manage those files for you.
Copy as DNG, and Copy options are used to add images to the catalog and copy the original files to a new location. These are used to copy images from your camera or a card reader to more permanent storage on your hard drive while adding them to the catalog. The DNG option also converts the raw files to the DNG format.
Move adds files to the catalog, puts the images in a new location, and deletes the original files from the source location. Be careful with this one, but it can be handy in sorting and editing out useless images from a mass import folder into other folders. Lightroom won’t care where they are, but it could be handy for other reasons.
On the right is the destination choice. This is where on your computer hard drive or external drive you want the files to be maintained. This is where people get confused. The files still have to be on a drive somewhere in the computer as they were if you were using Bridge or another navigator. The only difference is that they will be managed and referenced by Lightroom for a more convenient means of searching for and viewing the files.
In addition to the From – How – To options, the To section includes File Handling, Renaming, and the application of develop settings and keywords to the incoming files. The actual destination option is at the bottom of the list. This is to encourage you to make decisions about how the files will be managed at the beginning of the process to make things like batch renaming and the creation of previews easier.
Once you get the concept that the files are not actually in Lightroom, but rather are managed by it, you will be better able to understand how the program works for you. While your incoming files may be organized in folders by the date they were shot, the images in Lightroom can be put into collections organized by subject matter or any other criteria that suits your purposes.