> Can I remove those images from the floppies 'page' and mount other ones such as game or application disks while still having access to workbench.
Yes, but you have to setup an ADF mountlist before starting the configuration otherwise you wont see any available disks to swap with when the emulation starts.
> Is it effectively a hard drive for the machine? Can workbench be installed there and the machine booted from the folder, or is that not how it works?
Yes and Yes.
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