/etc is one of UNIX systems' most essential directories. It holds all the basic system configuration files. Never 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.
Here are some important files:
passwd and shadow: these two are text files which contain all system users and their encrypted passwords. shadow is only there if you use shadow passwords, which is the default installation option;
inittab: this is the configuration file for 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 other files. For example, bash uses bashrc;
crontab: cron's configuration file, the program responsible for periodic execution of commands.
Also, certain subdirectories exist for programs which require a large number of configuration files. This applies to the X Window System, for example, which stores all its files in the /etc/X11 directory.