Metadata (: meta-+ : data "information"), literally "data about data", is information that describes another set of data. A common example is a card, which contains data about the contents and location of a book: It is data about the data in the book referred to by the card. Other common contents of metadata include the source or author of the described dataset, how it should be accessed, and its limitations.
Other machine generated data about data, such as the reversed index created by a free-text search engine is generally not considered as metadata. Another important type of data about data is the links or relationship among data. Some metadata scheme attempts to embrace this concept (such as Dublin Core element link). Since metadata is also data, it is possible to have "metadata of the metadata of data".
Metadata is more properly called an schema when it is structured into a hierarchical arrangement. Both terms describe "what exists" for some purpose or to enable some action. For instance, the arrangement of subject headings in a library catalog serves as not only a guide to finding books on a particular subject in the stacks, but also as a guide to what subjects "exist" in the library's own ontology and how more specialized topics are related to or derived from the more general subject headings.
Some content adapted from the Wikinfo article "Metadata" under the GNU Free Documentation License.
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