This system was common in the earlier PCs as there was only one user.
The first supercomputer of the world named CDC 6600 also had only a single directory for all the files and was also used by multiple users concurrently.
This system was only made to keep every software design simple.
The figure given below shows an example of this system.
Having only one directory in a system with many users can create the problem, that is, different users may accidently use the same names for their files.