The software allows you to watch folders and organize your files according to your rules.
"Hazel can open, archive, set color labels and add Spotlight comments. In addition, you can have Hazel rename your files or sort them into subfolders based on name, date or whatever combination of attributes you choose. With Hazel's rule-based engine, you can create powerful workflows to automatically organize and process your files."
It also watches your trash and cleans it automatically when a certain size of junk is reached. It also features "App Sweep" which asks to delete settings,saves and temporary files if you drop an application into the trash. (dont worry it can also undo this actions).
My rules for example include setting color labels for downloaded files (blue for new ones, red for files that sits longer then 1 week in my downloads folder) moving videos and applications to the specified folder and sorting pictures into iPhoto.
Hazel is really great to keep your folders organized and is one of the tools that daily does its magic without me even noticing.