A library is an online database used for storing and organizing files. iTunes is a widely known and commonly used example of this particular definition of a library. "Library" refers to the entire collection of items in a particular location, and within the library, a user can create various subgroups to organize the items within the library. The following screen shot displays an example of a library and its various subgroups in iTunes:
Libraries can also be used to organize email contacts. For example, to organize contacts within a particular library, a user can organize a series of groups. Groups organized within an email contact library can be seen in the following screenshot.
The above image shows a "library" of 101 contacts, and two subgroups within the library.
Managing you Library:
Organizing your digital libraries are the key to making your life easier, as well as any task where you need a large number or files (regardless of their type). Grouping files based on categories (themes, places, dates, programs, ect...) are the key to utilizing your libraries effectively and making your life easier.
Photography and your digital library:
Jason Row, a British travel photographer, has a great page demonstrating ways in which to an efficient photo library. Click on his name and you can also learn about digital libraries for photographers.
Here is an example of image software that allows you to organize your images in a library by category files (on the left side of the screen)