README.txt

This directory is reserved for core module files. Custom or contributed modules
should be placed in their own subdirectory of the sites/all/modules directory.
For multisite installations, they can also be placed in a subdirectory under
/sites/{sitename}/modules/, where {sitename} is the name of your site (e.g.,
www.example.com). This will allow you to more easily update Drupal core files.

For more details, see: http://drupal.org/node/176043

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drupal/modules/README.txt
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  1. This directory is reserved for core module files. Custom or contributed modules
  2. should be placed in their own subdirectory of the sites/all/modules directory.
  3. For multisite installations, they can also be placed in a subdirectory under
  4. /sites/{sitename}/modules/, where {sitename} is the name of your site (e.g.,
  5. www.example.com). This will allow you to more easily update Drupal core files.
  6. For more details, see: http://drupal.org/node/176043