Libraries let you access and arrange items from one or more folders quickly without moving them from their original location. Libraries themselves don't store your files or folders. Instead, they point to different locations on a hard disk or external drive attached to your computer. This gives you easy access to a category of files no matter where they are stored. For instance, if you have music files on your hard disk and on an external drive, you can access all of your music files from within the "Music" library.
For more information about Windows 7 Libraries see:
This will show you how to add or remove the Libraries
folder and all Library folders in the Windows Explorer Navigation Pane
in Windows 7.