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I went through the IntelliJ IDEA documantation here http://www.jetbrains.com/idea/help/project.html and it describes the structure of a directory-based format project and a file-based format project, why should i prefer one over the other?
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The directory-based format was introduced later, and its main advantage is that it's easier to store project files in the version control system, because the project data is split over multiple files, and merge conflicts are less likely.
Project formats In IntelliJ IDEA, there are two types of formats in which a project's configuration can be stored — the file-based format and the directory-based format.
Configuration directory The IntelliJ IDEA configuration directory contains user-defined IDE settings, such as keymaps, color schemes, custom VM options, platform properties, and so on.
In IntelliJ IDEA, a module is an essential part of any project – it's created automatically together with a project. Projects can contain multiple modules – you can add new modules, group them, and unload the modules you don't need at the moment.
The file-based format was the only one available in older versions of IntelliJ IDEA. The directory-based format was introduced later, and its main advantage is that it's easier to store project files in the version control system, because the project data is split over multiple files, and merge conflicts are less likely.
The downside is relatively minor: you can't open a directory-based project by double-clicking it in a file manager of your operating system.
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