The index.html file at the root of the Sites folder and the index.html file in each site’s folder are auto-created files that do not contain any content; they contain refresh tags that point to other pages. The index.html file at the root level of the site’s folder points to the index.html file in the folder of the first site that you created in iWeb. This index.html file in turn points to the first page you created within that site in iWeb. If you delete the first page you created, this index.html page points to the second page (and the third if you delete the second, and so on).
This approach makes a certain amount of sense. When most Web servers receive a request for a URL that doesn’t include a specific page, they look for an index file in the requested directory and send that instead. Using this approach, Apple ensures that no matter what you name the pages in your site, users do not get a Page Not Found error if they don’t specify an individual page when visiting your site. The use of the first page created as the location for the refresh also makes sense because most people typically create a Welcome page first (regardless of whether they use one of Apple’s Welcome templates).
If you want to change the default page displayed by your site, you can easily edit the appropriate index.html files and adjust the refresh tag to specify a different page. Just change the URL referenced in the refresh tag. Remember, however, to use a relative path URL so that when the site is placed on a server (or your iDisk), the refresh still functions.