I’ll provide you with my vision of somebody who feels very uncomfortable in the Java world, which I assume is also your case.

What it is

A workspace is a concept of grouping together:

1. a set of (somehow) related projects
2. some configuration pertaining to all these projects
3. some settings for Eclipse itself

This happens by creating a directory and putting inside it (you don’t have to do it, it’s done for you) files that manage to tell Eclipse these information. All you have to do explicitly is to select the folder where these files will be placed. And this folder doesn’t need to be the same where you put your source code – preferentially it won’t be.

Exploring each item above:

1. a set of (somehow) related projects

Eclipse seems to always be opened in association with a particular workspace, i.e., if you are in a workspace A and decide to switch to workspace B (File > Switch Workspaces), Eclipse will close itself and reopen. All projects that were associated with workspace A (and were appearing in the Project Explorer) won’t appear anymore and projects associated with workspace B will now appear. So it seems that a project, to be open in Eclipse, MUST be associated to a workspace.

Notice that this doesn’t mean that the project source code must be inside the workspace. The workspace will, somehow, have a relation to the physical path of your projects in your disk (anybody knows how? I’ve looked inside the workspace searching for some file pointing to the projects paths, without success).

This way, a project can be inside more than 1 workspace at a time. So it seems good to keep your workspace and your source code separated.

2. some configuration pertaining to all these projects

I heard that something, like the Java compiler version (like 1.7, e.g – I don’t know if ‘version’ is the word here), is a workspace-level configuration. If you have several projects inside your workspace, and compile them inside of Eclipse, all of them will be compiled with the same Java compiler.

3. some settings for Eclipse itself

Some things like your key bindings are stored at a workspace-level, also. So, if you define that ctrl+tab will switch tabs in a smart way (not stacking them), this will only be bound to your current workspace. If you want to use the same key binding in another workspace (and I think you want!), it seems that you have to export/import them between workspaces (if that’s true, this IDE was built over some really strange premises). Here is a link on this.

It also seems that workspaces are not necessarily compatible between different Eclipse versions. This article suggests that you name your workspaces containing the name of the Eclipse version.

And, more important, once you pick a folder to be your workspace, don’t touch any file inside there or you are in for some trouble.

How I think is a good way to use it

(actually, as I’m writing this, I don’t know how to use this in a good way, that’s why I was looking for an answer – that I’m trying to assemble here)

1. Create a folder for your projects:
   /projects

2. Create a folder for each project and group the projects’ sub-projects inside of it:
   /projects/proj1/subproj1_1
/projects/proj1/subproj1_2
/projects/proj2/subproj2_1

3. Create a separate folder for your workspaces:
   /eclipse-workspaces

4. Create workspaces for your projects:
   /eclipse-workspaces/proj1
/eclipse-workspaces/proj2