The /etc and /usr/etc directories are the ``management" directories. /etc and /usr/etc contain programs used by the system administrator to administer and configure the system to the needs of the users.
One of the most important files of the /etc directory is the passwd (pronounced ``password") file. The passwd file contains basic information about each user's account, including the logon and the password (encrypted) of every user!
Again, the commands are in two different directories simply for historical reasons.