One of the major changes in Moodle 2.0 is how files are handled.
In Moodle 1.9x and previous, files were uploaded to a files area within a course and had a URL directly tied to the course itself. For anyone who has uploaded files to web sites and linked them, this made sense. However, it was annoying that the links were fixed rather than relative, so if you wanted to use content in a new course, you had to either do a backup and restore or had to upload the files again.
In Moodle 2.0 the file picker system means that files used in one course can be shared across multiple courses, because they are stored in one site-wide repository. Course instructors can create a file system that makes sense to them and identifies the files as having been uploaded by them. They can choose the level of copyright or creative commons licensing appropriate to the material.
However, it’s important to understand that as the File system repository currently functions, you do not have a way of getting at the exact file URL. According to an article on the Moodle.org site, “this is because the files are in a directory inside moodledata and are not exposed by any direct URL from the web.”
So when you upload a file via the file picker and wish to use it in another course, you use the file picker to select it rather than having to copy and paste a URL. It’s a lot neater and simpler.
When it comes to displaying videos, you can choose whether to link to it as a file or to create a web page and use the media embed functionality of Moodle’s WYSIWYG editor.
There is a legacy course files option but it’s important to keep in mind that it is not actively supported and is going to make course backups and restores a bit chancey. Plus, because Moodle describes it as deprecated, there is a chance that this option might not be included in future versions of Moodle.
As with any roll-out of new software (and Moodle 2.0 is that- at this writing courses backed up in 1.9x currently cannot be restored directly into Moodle 2.0), communication and education are keys to success.
So when it comes to managing files in a new installation of Moodle 2.0, both administrators and educators are far better off if sufficient training in using the file picker system is provided in advance of making the change to Moodle 2.0 than using the legacy file option.