There is no mystery in the way catalogs are working. Basically, it's just like a paper catalog or the equivalent managed in Word, Excel or similar.
The best comparison is the catalog for a paintings museum. It's a booklet containing all the information about each paining:
- where it is situated in the museum
- all the needed information about the painting: author, date, subject, canvas size...
- a small image of the painting for visual search
- many alphabetical indexes to find by painter, subjects etc.
A catalog like in the organizer or in Lightroom is similar:
It stores:
- links to where media files are stored in your drives (drive and path)
- exif data written by your camera: date_taken, shutter speed, apeerture, GPS, ISO etc.
- your own organization input like tags, captions, albums, notes, stacks, version sets
- Small thumbnails for visual search
This means:
1 - a catalog only contains links, no image file
2 - If you have different catalogs (made by another person or created at different times or for different needs) they completely ignore what is done in other ones. However there are tools to 'convert' old catalogs.
3 - Some of the information in catalogs like tags, captions, ratings can be 'written' to the metadataheader of the file themselves. That's not automatic, you have to do it yourself. A huge part of the organization, the way images are grouped into albums, stacks, version sets or projects, can't be written to files.
This means that to keep all the information in a catalog when restoring after a crash or migrating to a new computer, you NEVER import again the files in a new catalog. You CONVERT the old catalog or you use the BACKUP and RESTORE from the organizer.
https://helpx.adobe.com/photoshop-elements/kb/backup-restore-move-catalog-photoshop.html
About storing files in hierarchical folder structures:
That's a very limited way of organizing. You rely heavily on your memory. You can't use two types of hierarchies at the same time (date vs events or people). You are inclined to create a lot of duplicates. Other readers won't understand your own logic. Do you believe any warehouse management system implies storing the palettes alphabetacally? No they are stored automatically in empty spaces and managed by a management system like a catalog.
This also means that if you want to use catalogs and take advantage of their strengths, you'll have to prefer the logical organization with tags, albums, stacks, version sets rather than the physical storing organization.
You can completely reorganize your media files library without moving any file in your drive. You don't need to create duplicates for different purposes. Most of the time, you don't need to create multiple catalogs, a single one is much more efficient. You can use many types of searches, including the advanced search which works similar to a Google search, combining keywords, captions or parts of captions, people and places.
Don't work against your catalog (it's your own personal organization). Don't use multiple catalogs. Don't re-import, losing the best of your organization. Work with your catalog using conversion or backup and restore.