Two Level Directory
In two level directory systems, we can create a separate directory for each user. There is one master directory which contains separate directories dedicated to each user. For each user, there is a different directory present at the second level, containing group of user's file. The system doesn't let a user to enter in the other user's directory without permission.
Characteristics of two level directory system
Every Operating System maintains a variable as PWD which contains the present directory name (present user name) so that the searching can be done appropriately.