I’ve changed the title of this series, starting with this post, because I like the sound of “Deep Dive” much more than “101.” The rails new command is probably the first bit of the Rails command line we all learned. Give it an application name, and that command will create a fully functional (sic) Rails web application. Much of the convention over configuration plays out in the generated structure, with the app directory holding our model, view, controller, and (now, at Rails 3.1) client-side assets. My added emphasis on “fully functional” in the previous statement exists to point out that the site is hardly production-ready.
RubySource: Rails Intro, Deep Dive: App Generation