How to Set-Up iPod Nano: Third Step

Now we come to the iPod summary panel. You can see the name and model of your iPod here, along with options for how the iPod syncs media from iTunes and another section for voice features.

The big thing to note here is that if you check the "manually manage music and videos" box, iTunes will no longer push music and video onto your iPod automatically. Instead, you'll need to drag selections and playlists from your library and onto the player's icon. Some people like the precise control that manual management gives them, but most users tend to leave this unchecked and let the iPod do its thing automatically.

From: cnet.com.au
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Nice, managing your files is about doing your own thing your just letting iPod do its own thing.