The library editor creates XML files which contain, YML data, component source code and images all in one file. When a component is copied to a library its source code, which is specified through the header and source properties, is copied into the library file. Copying from a library to a simulation will write the source code into the simulation directory. The simulation directory is the same directory where the simulation's YML file is located. However, files will not be overwritten, so you must take care that source code files that differ have unique names. Also, if a simulation component depends on some file which is not listed in either a header or source property it will not be copied into the library.
You can open, close, save and create new libraries via the Library menu.