When you create a new file in a git folder, it starts as untracked. This means git knows the file exists but does not track changes to it yet. Running 'git status' shows untracked files. To track the file, you run 'git add <filename>', which stages the file. Staged files are tracked and ready to be committed. After running 'git commit', the file is saved in the git history and is fully tracked. Running 'git status' after commit shows a clean working tree with no changes. This flow helps you understand how files move from untracked to tracked in git.