Right. Any file that you put in the mods folder or one of its subdirectories will replace its equivalent file. If there is no equivalent file, it gets loaded like a normal file.
End of quote
Am I missing something in this explanation? From what I've seen, it doesn't quite work this way. It seems that each entry (i.e. each individual tech, building, whatever) replaces an existing one with the exact same ID, but the files themselves aren't replaced wholesale.
While a great feature I'm very happy for, the mods folder would be easier to use if it actually did replace each file completely.
As it is, some data (notably tech requirements and abilities) aren't replaced at all, but added to the default item. This makes it next to impossible to effectively remove a default tech, ship, improvement, or anything else with a tech requirement using a mod. It also makes it very difficult to adjust the tech tree, as there's no way of removing abilities or the default tech req's from an existing tech either.
I know I'm a bit late on this, but I thought I'd mention it in case it wasn't actually 'working as designed'... or in case I'm doing something wrong...