ArcCatalog users organize, work with, and manage geographic information in workspaces and geodatabases. Workspaces are simply file folders on disk that are used to organize your GIS work—map documents, imagery and other data files, geoprocessing models, layers, geodatabases, and so on. Workspaces provide a simple way for you to organize and share logical collections of GIS information.
This is useful when creating geodatabases from scratch to use in large projects. You can easily organize, rename and recategorize files to be used in ArcMap.
The ArcCatalog screen should look similar to this one: