From Joomla! Documentation
The Options Form
To access the Media: Options form select the Options button in the Toolbar on the Media page. The fields are well commented and provided with default values that should be suitable for almost all sites. You usually only need to use the options form if you wish to keep Files separate from Images or if you have an unusual file format not included in the default list.
Beware: there are security implications associated with some types of file - a hacker's way in.
To set up a location for files that is separate from images first create a new folder in the root of your installation, for example files. Remember, it will be part of a url link so lower case and no spaces or punctuation marks.
FileSystem Local Plugin
Find the FileSystem Local plugin in the list of plugins and open it add your newly created file folder to the list of places you can keep media. Just click on the + button and select files from the list of available folders.
Make sure the plugin is enabled. Save & Close.
In the Options form enter the folder name in the Path to Files Folder field. Make sure you do not use the name of an existing core Joomla folder.
When set up, you will be able to choose between the images and files folders in the Local part of the Media view.
In this series of tutorials: