Describing your data thoroughly and at multiple levels is one of the most important data management practices you can do for both yourself and others.
Description and documentation is also sometimes referred to as metadata. Metadata is information about your data or processes that helps provide context for understanding your research data. Metadata is important to have at the project or folder level as well as at the item or file level. Describing your data at multiple levels helps provide a more complete picture of how the data was produced, gathered, cleaned, and analyzed.
A ReadMe file is a plain text file which provides overarching information about the project and files within the project. ReadMe style metadata is a simple, discipline-agnostic way to contextualize your data files. Best practice is to create a ReadMe file for each file, but this may not always be necessary. At minimum, a ReadMe file should be created for each project. For the sake of simplicity, ReadMe files are generally text (.txt) or Markdown files.
What goes in a README file?
Cornell University Library provides a guide on ReadMe files and a downloadable readme file template, which may be customized according to your needs.