The /proc filesystem contains a illusionary filesystem. It does not exist on a disk. Instead, the kernel creates it in memory. It is used to provide information about the system (originally about processes, hence the name). Some of the more important files and directories are explained below. The /proc filesystem is described in more detail in the proc(5) manual page.
Note that while the above files tend to be easily readable text files, they can sometimes be formatted in a way that is not easily digestable. There are many commands that do little more than read the above files and format them for easier understanding. For example, the free program reads /proc/meminfo and converts the amounts given in bytes to kilobytes (and adds a little more information, as well).