Magento core modules are placed in mage namespace, core/Mage/Catalog and all custom modules are placed in local/CustomModule.

You can have more than one module with same name but they need to be placed in different namespaces.

In Magento, namespaces are used to organize classes, interfaces, functions, and constants into a hierarchical structure to prevent naming conflicts and make code more modular and manageable. Here’s how namespaces are used in Magento:

Preventing Naming Conflicts: Magento has a large codebase with many modules and third-party extensions. To prevent naming conflicts between classes, functions, and constants defined in different modules or extensions, namespaces are used to encapsulate them.
Modular Code Structure: Namespaces help in organizing code into logical units, making it easier to understand and maintain. Each module in Magento typically has its own namespace, which encapsulates all the classes and other code elements specific to that module.
Autoloading: Magento’s autoloader uses namespaces to locate and load classes automatically when they are referenced. This makes it convenient to work with classes without the need for manual include or require statements.
PSR-4 Standard: Magento follows the PSR-4 standard for autoloading, which specifies a mapping from namespaces to directory structures. This allows Magento to autoload classes based on their namespace and class name without the need for explicit configuration.
Vendor Namespace: Magento also uses a vendor namespace convention, where the namespace for a module is typically derived from the vendor name. This helps to ensure uniqueness and prevent conflicts between modules developed by different vendors.

In summary, namespaces in Magento serve to organize code, prevent naming conflicts, facilitate autoloading, and adhere to coding standards. They are an essential aspect of Magento’s modular architecture and contribute to the maintainability and scalability of Magento-based projects.