Exactly.
In the older days of computing, hard disks were unknown (or hideously expensive).
Therefore floppy disks (5.25", various capacities) were used as storage devices.
Also since software was largely non-GUI (ie. CLI) based, applications were very small.
You would have tow drives, A: and B:. Here the system would be booted from A: drive, and the system floppy could then be ejected (or retained).
Applications such as Wordstar were available on floppy, which was inserted in A: drive. All documents created and personal storage was on a separate floppy in B: drive.