You have notebooks, they break down into sections and pages, you take notes in them, then you can conveniently search and hyperlink between them (it's more convenient in 2010, search is nicer and you can use wiki-like links), etc. There are a bunch of other little features that make it nicer than keeping a lot of .txt or .doc files around, for example you can start a table just by hitting tab, it's got Word 2007's Equation Editor, when you paste something in from a web page it'll add a caption linked to the URL you got it from, it'll OCR images and let you search them, etc.