From MozillaZine Knowledge Base
The file cookies.txt is used in Firefox 2 or below and in Mozilla Suite/SeaMonkey 1.x for storing cookies, which are lines of plain-text stored and retrieved by websites you visit.
Starting in SeaMonkey 2 and Firefox 3, cookies are stored in the database file cookies.sqlite. In converted profiles, cookies.txt data is migrated to cookies.sqlite. 
A typical line from the file might read (the spaces are tabs in the original file):
The meaning of the above line is as follows:
This file can be moved to a different profile without any extra effort.
Deleting cookies.txt will reset (clear) all your cookies. A new file will be created on start up or when the application first needs to write to the file.
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