Area 3 is for your Mac's volumes, files and folders. To change volume, select the new volume from the popup menu on the left. To move around folders, double-click on them in the file/folder listing, or double-click the "up-arrow" icon at the top of the listing to move up a folder. To go to a folder you have already been to on a particular volume, select it from the second popup menu showing the folders you have opened.
Play around a bit and you will get the hang of it ;)