To use Unix commands wisely it is helpful to understand some basic concepts of how information is stored and jobs are processed on a computer. A basic fact of computing life is all resources are finite. Since Unix does a good job at sharing resources among simultaneous or sporadic users and tasks, it is all too easy to think of your computer as limitless. This is patently wrong since even the most powerful system can be slowed to a crawl by poor usage or overload.
Information in an operating systems such as Unix is stored in files which basically are just a series of characters or bytes. A file can contain any type of computer-readable information or data, and thus may be a letter you are writing, the output of a program, or a command which Unix will recognize. For example, this chapter is stored in a file called 2.tex. As you enter programs or data into the computer, they first get written into the computer's temporary (or fast) memory and then, if so commanded, are stored in files on the computer's ``hard disk'' (hard compared to ``floppy'' diskettes). The spinning hard disk is ``permanent'' memory, at least until it wears out after some years of use.
The files you key (``type'') in are called text or ASCII files because they contain human readable ``text" stored in the American National Standards Code for Information Interchange. There are also binary files and object files containing information which is not readable by humans but meaningful to the computer (beware, if you develop an interest in reading these files). The programs you actually run on the computer are binary or executable files; binary since the instructions are written with just 0's and 1's and executable since these instructions can be loaded directly into the computer's memory and then directly obeyed. While you may now be curious enough to look at some binary files, do not do it with a text editor since editors are meant for reading text and may get quite confused when faced with a binary file.