What does the line "package com.treehouse" mean

Directory is structure of folders on your machine, so if the package is com.treehouse you should have structure:

com(folder)--|
             |
       treehouse(folder)--|
                          |
                     Treet.java(file)

Creating a package you should do 2 things : create structure of folders and declare it in the file using package key word.

It means that the file "Treet.java" is declared as part of the package. In this case the is directory : "root/com/treehouse/".

You can imagine this declaration as informing compiler about organization of your project. Without this declaration wouldn't even know about existing the package. This declaration actually creates package and structure of folders let compiler find the proper files e.g

you got class named ClassA with declaration:

package com.treehouse;

now compiler will know that ClassA belongs to packege named "com.treehouse" and also it will be informed that the package can be found in directory "com/treehouse". Now When in another class there would be

import com.treehouse.ClassA;

java would look for the class in directory com/treehouse and if it wouldn't find this structure it would be very disappointed, I mean java wouldn't compile that so it's important that packacge declaration should be followed with proper folder structure. Packages are also useful because it creates namespace for your classed I mean you can have two classes named ClassA, but as long as they are in different packages

com.abc.ClassA
com.xyz.ClassA

compiler would treat them as different classes so you don't have to worry about any conflicts.

Of course you can do this but your code won't be compiled because compiler won't find desired class where it should be. As I said declaration should be followed by proper folder structure.