System.ext2

  is a file containing an ext2 filesystem that XDAndroid mounts at. In Android, the  directory generally contains files specific to a particular Android release (Eclair, Froyo, Gingerbread), including:
 * the Dalvik virtual machine
 * APK package files for standard apps (, ,  ,  , etc.)

is generated by the process described in Building and Packaging.

is generally stored in the  directory of the SD card.

does not contain:
 * the Linux kernel and associated kernel modules  &mdash; those are maintained and released separately as
 * essential UNIX utilities such as  and   — those are provided by rootfs.img