Why is my .hgignore not ignoring?

After almost an hour of tweaking my .hgignore file trying to figure out why it was not, in fact, ignoring ANY of the file types and folders I told it to, I discovered that .hgignore should be in the root of the repository, not in the .hg folder. I suppose this makes sense if you want to source control and share this file across machines or developers, but the temptation to put a file starting with .hg into the .hg folder was simply too great to resist. Sigh.