The /etc directory is one of the essential directories in any Unix system. It contains all the basic system configuration files. Please do not delete it to save space! Likewise, if you want to extend your tree structure over several partitions, remember that /etc must not be put on a separate partition: it is needed for system initialization.
Some important files are:
passwd and shadow: these two files are text files which contain all the system users and their encrypted passwords. shadow is only there if you use shadow passwords, which is the default installation option;
inittab: is the configuration file for the program init, which plays a fundamental role when starting up the system, as we will see later on;
services: this file contains a list of existing network services;
profile: this is the shell configuration file, although certain shells use others. For example, Bash uses bashrc;
crontab: configuration file of cron, the program responsible for periodic execution of commands.
There are also certain subdirectories for programs which require large numbers of files for configuration. This applies to X Window System, for example, which has the whole /etc/X11 directory.