The File Preview plugin enhances the file explorer in Obsidian by displaying a preview of the file contents beneath the markdown file titles. Users can quickly view text excerpts or images, improving navigation and file management efficiency. The plugin includes a toggle button to show or hide previews and supports customization of indent settings for better organization. For newly created files, users can refresh the file explorer to include their previews. This feature is particularly useful for quickly identifying file contents without opening them, streamlining the user experience.