IBM OS/360 uses a system of extents to manage file allocation. An extent is a contiguous block of storage allocated for a dataset. When a file is created, the operating system allocates space in the form of one or more extents, ensuring that the data is stored in a continuous manner, which helps optimize I/O operations.

Key Points:

1. Extent Allocation: Each dataset can be allocated multiple extents. The first extent is often larger, while subsequent ones can vary in size based on available space and fragmentation.
2. Tracking: OS/360 keeps track of these extents using a Directory Block (DB), which contains metadata about the dataset, including its extents.
3. Performance: Contiguous allocation reduces fragmentation and improves performance, as reading data from contiguous blocks is generally faster than accessing scattered data.

If you need more detailed technical specifics or further insights into how this impacts performance and management, let me know!