When you start Claude Code from a folder, that folder becomes its world. Everything inside it is visible. Everything outside it doesn't exist.
This is the single most important thing to understand about how Claude Code works. Get this right, and everything else makes sense. Get it wrong, and you'll spend half your time wondering why Claude can't find things.
The Room Analogy
Think of your computer as a house with many rooms. Each room is a folder. Documents, Downloads, Desktop, Projects. Each room has stuff in it.
When you open Claude Code, you're choosing which room to let it into. Whatever folder your terminal is in when you type claude, that's the room Claude sees.
Let's use the practice folder we created earlier. Open your terminal and navigate to it: