What is the working directory?

The working directory is the current state of the project's files on disk that the developer works with.

This is:

• the files you see in the project folder
• the code that opens in the editor
• the place where you make changes manually

The working directory contains:

• unchanged files
• changed files that are not yet added to the staging area
• new (untracked) files

The working directory differs from:

• the staging area (index) - changes prepared for a commit
• the repository (history) - already saved commits

Relationship between states:

• changes first land in the working directory
• then get added to the staging area
• after a commit they are saved to the history

A key phrasing for an interview:

The working directory is the working copy of the project where all changes happen before they get added to the staging area and committed.