While talking about flashing, there are exactly two distinct processes and related files (also called images) frequently mentioned:
(flashing the) FIASCO aka *COMBINED*, also referred to as "rootfs" though this file and flashing process also consists of / affects NOLO bootloader (the several stages), the kernel, and usually the GSM modem firmware, in addition to the root filesystem which is basically the content of your 240 MB NAND flash storage and implements the Linux operating system.
(flashing the) eMMC aka *VANILLA*, which will replace the complete content of N900's internal 32 GB eMMC storage (embedded MMC), which is: the /home partition which has your stored browser passwords and game highscores and calendar and contacts etc. /home is also containing /opt. Plus eMMC stores all the content of the MyDocs 28 GB VFAT partition, where all the media and docs and other user content lives.
Often people use the term "firmware" for either or both of those images. It's misleading.

Flashing the rootfs on your N900 will reset the device's linux system back to factory settings, meaning all additional applications will vanish, and some configuration details (e.g. LED patterns) are reset to the original configuration, with the exception of the lock code; if you have already set a custom lock code, it will remain intact, instead of reverting to the default "12345." Also, all information contained in /home (except /home/opt) will remain intact. This means the information stored in /home/user/MyDocs which is the area visible in the default file manager (or when connecting to a computer), will remain intact. Your external memory (microSD), will also be unaffected.

Flashing the eMMC and rootfs on your N900 will completely reset the device to factory settings, reverting everything to factory settings, including /home with all (app-)preferences, bookmarks, contacts, communications, but again, excluding the external memory on micro-SD card and the lockcode. (you MUST flash rootfs as well, when flashing eMMC (because of /opt deletion)

It is strongly advised you regularly use the Backup application to create backups of your settings and data to a safe storage. You will want to configure the Backup application in such a way it stores the backups to your microSD card - alternatively when creating manual backup of MyDocs as suggested below, backups stored to default location "N900" will be included and thus safe.