The iTunes media-management tool from Apple is capable of organizing audio and video content into one master library. You can let iTunes point to files and folders in their existing locations, or copy them into a file and folder structure determined by iTunes (by default stored in "My Music/ iTunes"). Consolidation copies tracks from their original locations to a folder system managed by iTunes.
iTunes Media Management
During the setup process, you're asked whether or not iTunes should copy files to its own folder structure when adding them to the library. The same option can be accessed at a later date via the Edit -> Preferences -> Advanced -> "Copy files to iTunes Media folder when adding to library." If this option is selected, when a new video or audio track is added to the iTunes Library, it will be copied to a folder managed by iTunes. If it isn't selected, the file will remain in its original location, and the corresponding entry in the iTunes media library and playlists will point toward it.
The Consolidate Tracks Option
To consolidate the tracks in the iTunes library, copy them from their existing locations (which could be in various folders and on various external drives) and place them in the library folder managed by iTunes (listed in Edit -> Preferences -> Advanced). If the "Copy files to iTunes Media folder when adding to library" option has been selected since the library was created, you don't need to consolidate tracks -- they will already be in the folder structure that iTunes has built.
How to Consolidate Tracks
To consolidate all of the tracks currently listed in the iTunes library, select File -> Library -> Organize Library. On the dialog box that appears, click "Consolidate files," then click "OK." On the same dialog box, you can allow iTunes to manage music, movies and other content in its own folder structure, if it isn't doing so already. The progress bar at the top of the iTunes screen indicates when the process has finished. To consolidate individual files or smaller groups of files, select them in the iTunes library, right-click and choose "Consolidate Files."
Whenever tracks are consolidated or added to the library with folder management turned on, the original files are left in their current location. iTunes creates copies of the originals for its own use, rather than moving them (once tracks have been consolidated, the originals can be safely deleted). Consolidating tracks and allowing iTunes to manage the file and folder structure of the media library keeps all of the audio and video content in one location, making it easier to back up a library or move it to a new location.