Because the Atari ST was developed in the earlier years of computers, it suffered from system filename restrictions. Specifically the early 8.3 naming convention that limited directories and files to a total of 11 characters. Of course, the characters after the period in the filename are for identifying the file's type. However, that poses no restriction on directory structure as long as you don't exceed the 11 characters. More importantly, you need to use the period in the directory name to allow the emulator to read the system correctly.