Your repository is the central spot for all of your project's files. To work on them, you checkout a local working copy to your Mac. There can be many working copies per repository.
A working copy looks just like any regular folder. You can make sub-folders in it and use any applications you want to create and edit files in there. Text, images, code, anything goes.
When you're happy with your work, you commit it. This creates a new revision in the repository. You can also add new files, and delete files to remove them from the repository.
After you commit, everyone in your team can see the new revision, and update their working copies to get the latest changes. Later, it's also easy to figure out who commited what and when.