Basic OS X folders - folder structure regarding users
Just a quick answer....

Items in the Applications are system wide, not per user.  You can deny Users access to particular applications, but in general they are available to everyone.

The User folder holds items that are specific to each user and only available to each user individually and the superuser (root).

Macworld has a good article that goes into this further

Also, OS X Daily had a nice summary table of the folder structure which should be helpful: