One particular incident that illustrates this point happened to a user who called me one day saying his entire Microsoft Entourage store of emails, contacts, etc. had just "disappeared" and Entourage had "reset to when it was new." Well, naturally that sounded a bit odd to me so I went over to see what I could do to resolve this little problem.
After a bit of searching around I discovered the user had "accidentally" moved a very important folder out of a folder called "Documents" (which is located in his individual "Users" folder) to the Trash. For the win, can you guess which folder he threw in the trash? iI you guessed it was his "Microsoft User Data" folder, you would be correct.
Fortunately for this particular user, after moving the folder back where it belonged all was well with Entourage and his data was restored. Let's go over that again, just to be clear. This particular folder, the "Microsoft User Data" folder, is located in your particular "Documents" folder on the hard drive of your computer.
So, if your user name is "john" for example, then your "Documents" folder is located inside the "john" folder inside the "Users" folder on the main level of your Mac's hard drive. Microsoft Office, like many other programs, stores important data in your individual user folder. Due to the way OS X works, you have full access to your individual user folder and can pretty much move or throw away anything you want.
However, don't do it. Unless it is a file or folder you know for sure you actually created yourself, leave it alone. Folders with names like "Microsoft User Data", "Library", "Application Support," etc. are placed where they are for a reason and if you mess with them or move them somewhere else, like to the Trash, you might be in for some real problems.
While we're on the subject of moving files and folders, OS X also has a certain way in which it likes many of its other default folders and files to be. Folders with names like "Applications", "System", "Library" and "Users" need to stay exactly where OS X puts them and should not be moved. Also, when you install Applications they usually get put into the "Applications" folder automatically so leave them there. In other words, let OS X put things where it wants and don't try to interfere -- it knows best.
There are, of course, some exceptions to this structure and if you know what you're doing you can often feel more free to make changes. But for most users, leaving things where they are is the best way to go. Sure, you might get lucky and not do too much damage by moving a folder or installing something somewhere other than "Applications", but then again you might run into issues and have to spend time figuring out what's wrong with your Mac instead of actually using it. And really, who wants to do that?