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Quota allows you to specify limits on two aspects of disk storage: the number of inodes a user or a group of users may possess; and the number of disk blocks that may be allocated to a user or a group of users.
The idea behind quota is that users are forced to stay under their disk comsumption limit, taking away their ability to comsume unlimited disk space on a system. Quota is handled on a per user, per file system basis. If there is more than one file system which a user is expected to create files, then quota must be set for each file system seperately.
See the nicely done mini-HOW-TO or try 'man quota'.