The Catalog
Elements refers to your image files using links—nothing is ever physically moved into the application. When files are imported, Elements makes links to where the images are kept (normally this is in the Pictures folder but it could also be other hard drives in the computer or external drives). This linking information, along with all the metadata, image thumbnails, tags, attributes, and keywords—in fact, everything you do with the program—is what is saved in the all-important catalog.
Occasionally, you'll be reminded to "back up" the catalog. If you have downloaded and installed Elements and just got stuck in organizing and editing, you might not even know that there was a catalog or what it does. It's important to back up this catalog on a hard drive that's separate to where Elements is located - an external hard drive is a good choice for this task.
The Catalog Manager (Organizer>File> Manage Catalogs...