I believe this refers to how the URL will be stored for imported data files,
files that are within or below the folder of the UR database location will be imported with a Relative Path,
files that are "outside" the UR database location will be imported with an Absolute Path.
The use of the Relative Path allows for transport of the UR database (and subfolders) to a new location without breaking the URL path. While this isn't an issue if data files are Stored upon import, it is an issue if the files are Linked.
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