You're right, that is a common misconception. The files are wherever you put them; however, the Lightroom editing "instructions" are not applied to those files but instead reside in the associated LR catalog files. The notion that the LR edits have somehow attached themselves to the original files is a second misconception. This does mean that one can't drag original image files willy nilly around the computer like they would before - they must be moved "within" the LR interface or LR won't know where they are anymore and will show you the dreaded "?" when you click on the image.

I respect everyone's right to choose what they prefer. We need to find file structures that fit the way we think and work. For me, though, putting all my raw files into a dated file structure and managing them and their resultant edits from within LR with key wording and collections is much preferable to the rather clunky way I had to do things in the years I spent with Bridge.