When we install ubuntu as a separate partition along windows, we create mount point for root. /home also resides inside /.Then why do we need to create separate mount point for /home.What is the significance of this? And also what is the difference between selecting primary and logical for the mount points?
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I suspect you only have to do this when you have opted to have a separate partition for the /home directory. This is optional. At minimum you could just have a linux swap partition and just one big partition for root.
Having a /home partition might be useful in the instance where your OS boots from a solid state drive, but you have a hard drive with much greater capacity also installed. Such a configuration could increase boot speed with out sacrificing storage space.

ToniWidmo
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/home is inside /.Hence isn't it futile to create /home separately?What is the difference between primary and logical partitions? – sabarish Jan 27 '14 at 10:35
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1In a POSIX file system, everything is 'inside' root. But that doesn't mean every folder is on the same physical storage device or partition on that device. Thus it is possible to configure your system to mount /home, and/or /tmp, and/or /usr and/or /var or whatever on any partition on any physical device. – ToniWidmo Jan 27 '14 at 10:54
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1@sabarish As for logical and primary partitions, that is a whole other question. But basically you can only have 4 primary partitions on a device. So to get more, you need to create logical ones. Sometimes called extended partitions. These are basically partitions within a partition. – ToniWidmo Jan 27 '14 at 10:56