The structure within Cascade builds the actual navigation that viewers of your site use. Base folder contains everything in your site. There are some folders within the structure that do not show up in navigation, such as _cms, css and imx, which are hidden.
Every folder needs a page with the system name of "default" inside it in order for it to work in the navigation. Notice how the greenlife folder structurally has two pages while the menu for that folder displays only one file - Green savings. When someone clicks on the folder, Green Living, in the published menu (shown in green in the image on the right) they see the content of the default file under the greenlife folder. This arangement is standard web publishing practice.