diff --git a/docsite/rst/intro_inventory.rst b/docsite/rst/intro_inventory.rst
index 789f4ac438a..a70f2b059ca 100644
--- a/docsite/rst/intro_inventory.rst
+++ b/docsite/rst/intro_inventory.rst
@@ -171,6 +171,17 @@ the 'raleigh' group might look like::
 
 It is ok if these files do not exist, as this is an optional feature.
 
+As an advanced use-case, you can create *directories* named after your groups or hosts, and
+Ansible will read all the files in these directories. An example with the 'raleigh' group::
+
+    /etc/ansible/group_vars/raleigh/db_settings
+    /etc/ansible/group_vars/raleigh/cluster_settings
+
+All hosts that are in the 'raleigh' group will have the variables defined in these files
+available to them. This can be very useful to keep your variables organized when a single
+file starts to be too big, or when you want to use :doc:`Ansible Vault<playbooks_vault>` on a part of a group's
+variables. Note that this only works on Ansible 1.4 or later.
+
 Tip: In Ansible 1.2 or later the group_vars/ and host_vars/ directories can exist in either 
 the playbook directory OR the inventory directory. If both paths exist, variables in the playbook
 directory will be loaded second.