A way of structuring an interface library in layers — from the smallest elements up through components to full page templates — so larger pieces are assembled from smaller agreed ones.
It gives designers and developers the same vocabulary and the same boundaries, which is what keeps a design system from drifting into a folder of one-off screens.
We use the layering where it clarifies ownership and ignore the taxonomy where it becomes bureaucracy — the point is a shared library, not correctly labelled atoms.