Events are simply folder that are auto created to group photos taken at the same events together. Click here to learn more!
They are very helpful and make it easier to arrange your photos. I used to use folders the way you did. They DO NOT make duplicates of your photos so it uses little hardrive space.
When running and using iPhoto (and any iLife app actually) you need to let go of the fanaticism of handling your folder/files hierarchically like your own little dictatorship like you did in Windows. iPhoto handles the organizing for you and you should only interact with your photos through iPhoto, not on the file level. Doing otherwise is asking for trouble unfortunately...