First - index.html is a file and cannot have any subfolders - only a folder can have subfolders or files.
So, assuming we're talking about a directory named index, then it goes like this:
If file1 and file2 were in the same subfolder, to get from file1 to file2, the code you need in file1 is a simple <a href="file2.html">file2</a>.
But since file1 is in folder1 and file2 is in folder2 - in order to get from file1 to file2, you first need to get out of your folder1 - you do that via ../ (the dots sort of mean to go backwards, and the '/' is the directory sign. So you go back up one level with the ../ (and now you're in the index folder)then you go down nto the next folder and the file in it as in:
<a href="../subfolder2/file2.html">file2</a>
Clear as mud?
How would I go about linking back to a different subfolder?
for example think of this:
index.html
which has 2 subfolders:
folder1 (which contains file1.html)
folder2 (which contains file2.html)
so to get from index.html to file1.html it is:
<a href="folder1/file1.html">
But how would I go backwords, from file1.html to index.html? And also from file1.html to file2.html?
Thanks.

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