The top-level folder or top-level directory (same thing) is a reference to the root level of a project.
So if you have a project structure like this:
your-project > Components > Header > Footer package.json README.md
The top-level directory is
your-project and everything inside it are top-level files & folders. You can also call them “first level” files so then in the example above, the files inside
> Components are second level folders.