A full path to a file is one which fully and uniquely defines the file's location, e.g. C:\My Documents\Temp.dat or D:\My Documents\Project1\Temp.dat.
A relative path omits the leading drive and (optionally) some or all of the directories preceding the file name, e.g. Temp.dat or Project1\Temp.dat.
A relative path has to be relative to something, and OrcaFlex takes it to be relative to the directory containing the parent file. How this parent is defined depends on the context within which the relative path is used.
If the parent file is undefined (such as with a new model or fatigue analysis which has not yet been saved), OrcaFlex uses the Windows working directory when OrcaFlex was started. In all other cases OrcaFlex uses the working directory.
Relative paths are usually more convenient than full paths. For example, if all the files referred to in a batch script file are placed in (or below) the same directory as that script file, then using relative paths means that the script file will still work if you rename the directory or copy it to another location.