Where is the $HOME folder located?

I read recently that .desktop files that are used as desktop shortcuts are placed in the $HOME/Desktop directory. Where is this directory?

Also, what does the $ part mean / do?

$HOME is an environment variable that contains the location of your home directory, usually /home/$USER. The $ tells us it's a variable. So assuming your user is called DevRobot the .desktop files are placed in /home/DevRobot/Desktop/.

If you want to know where $HOME points to, you can run the following in a terminal.

[ajefferiss@localhost ~]$ echo "$HOME"
/home/ajefferiss

You can use it to move around the filesystem, for example cd $HOME but generally you won't see that because you can use ~/ to represent the current users home directory. Or just run cd by itself to move to the home directory.

$HOME is an environment variable that points to /home/<username>. It is located under /, and it contains the user's files.

For more information you may want to take a look at Bash Reference Manual