[This Minepedia page][1] has some documentation; here's a simple overview.

* `World<x>` holds the data for the world in the `x`th slot.
 * [`level.dat`][2] contains information about your spawn point, time of day, inventory.
 * A number of folders used to organize data into at most 64 groups of chunks.<ul>
  * A second level of folder used to organize data into at most 4,096 smaller groups of chunks<ul>
   * The chunk files themselves, each storing terrain, item and monster data for the corresponding 16×16 slice of the world.</ul></ul>

Each chunk is as large as this hole:

> ![a 16×16 meters large hole all the way down to the void.][3]
> [Image courtesy of Raven Dreamer</sub>][4], say hello to the creeper.


  [1]: http://www.minecraftwiki.net/wiki/Alpha_Level_Format
  [2]: http://www.minecraftwiki.net/wiki/Alpha_Level_Format#level.dat_Format
  [3]: https://i.sstatic.net/1MYdd.png
  [4]: http://gaming.stackexchange.com/q/14695/23