moving php/application files outside of root folder

[eluser]alexandervj[/eluser]
Hi,
I've heard a lot about how I should not keep my applications files in the webroot. I'm not sure exactly what this means - I have my folders set up like this

/ root
--applications (folder)
--assets (folder)
--system (folder)
--user guide (folder)
--htaccess
--index.php

How would I change my folder hierarchy to make it more secure? Thanks