I would approach this pragmatically, beginning with the metaphor that kicked it off. I would tell the students something like this:
Imagine that it's 1925, and you're working at a giant company like General Electric as a secretary. There are files, meaning pieces of paper, for all kinds of things. Personnel files about employees, files of record for payments, files of company policies, board meetings, tax documents, you make it. There are hundreds of rooms holding thousands of file cabinets holding millions of files in hanging folders.
So the metaphor of a file, then, is a document with some information about something. And the metaphor for the folder is as a place to store those files.
We also call these folders "directories", another metaphor. A "directory" is from the same etmological root as direction, and it means "to guide". So, folders can be thought of as places where files sit, or can be thought of as a guide to where files are.
But translating that idea to the very alien mind of a computer involves some tweaks. First there's the idea that folders can contain folders, which can contain more folders still. This is incredibly convenient, and using the same metaphor as "directory", we call the list of folders and subfolders and subfolders that bring us to a particular file as a "path". Get it?
As for the files themselves, there are two perspectives to think about this. Again, the metaphor is there, but it breaks apart a bit in translation:
The first is from the file system, which is concerned with being able to store and retrieve these files. As far as the file system is concerned, a file is a size and a series of locations as to where the various parts of the file are stored. This is because the files don't have to be contiguous inside the computer. It doesn't actually matter if the first half is stored over here in the hard drive and the second half is stored somewhere else, since the file system will retrieve it for us as if it were one document anyway. The file system just has to keep track of everything so that the files can be assembled properly when they are needed.
The second perspective is the perspective of a file itself, which is really just some way to store some data, after all. So far, that's just like a file in our big office. But our files can store so many different kinds of data! We aren't just storing readable text. We can store pictures. We can store sounds. We can store runnable code. All of these require very different internal organizations, so the contents of files are extremely variable.
Many files begin with some sort of metadata. "Hey, I'm a picture, and this is my encoding and my color depth and my size and and and and...". Some files depend on the file system to just remember what kind of files they are. Every file is designed to be read by programs or by the computer itself, and is highly organized to make this possible.
So, a "file" means different things in different contexts, and the only overriding idea is that a file is a way to group data together.