The file storage works just like the database. The file details are all in the database juts that the physical binary is stored on the file system rather than in a database column.
You will find they are all stored under App_Data/Sitefinity/Storage/.. (I forget exactly)
All the files are stored as GUIDs with no exten. The guid references the row in the database. If you do decide to use File storage keep in mind that when you backup your DB you also need to backup the Storage folder with the files.
When you restore you also need to restore the folder as the folder is now an extension to the database data.
Hopefully that makes sense.
By default I don't use FileSystem storage expect for very large files. (Videos and pdfs for example) Actually I always use FileSytem for videos otherwise performance is an issue)