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Yes, you will need to download them to your hard drive. You don't need a specific folder set up for this. When you add a book to Calibre, it makes a copy in Calibre's internal library and leaves the original alone. Feel free to archive it or delete it.
Keep in mind that most books you purchase will have DRM, making them unreadable in Calibre. There are ways to strip out the DRM, but we can't discuss it here. I heard there's an apprentice named Alf who might be able to help you, though.
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