Working with Terraform involves managing collections of infrastructure resources, and most organizations manage many different collections.
When run locally, Terraform manages each collection of infrastructure with a persistent working directory, which contains a configuration, state data, and variables. Since Terraform CLI uses content from the directory it runs in, you can organize infrastructure resources into meaningful groups by keeping their configurations in separate directories.
Terraform Cloud manages infrastructure collections with workspaces instead of directories. A workspace contains everything Terraform needs to manage a given collection of infrastructure, and separate workspaces function like completely separate working directories. Learn more about Workspaces in the documentation.