Databricks: Difference between dbfs:/ vs file:/

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I am trying to understand the way Databricks stores files and I am a bit unsure of what the difference is between dbfs:/ and file:/ (see image below)

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From what I have been able to deduce from here, file:/ seems to be the area where external files downloaded via curl/wget get downloaded into in the following folder path:

%fs ls "file:/databricks/driver"

But what is file:/ really and why does it exist and how is it different from dbfs:/?

For the record, I am using the community free edition of Databricks.

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