This extension enables the user to open a file under the current cursor position. Just right-click on a pathname within a open document and select the open file under cursor option.
If the file is found by vscode then it will open a new tab with this file.
You have a document, containing some text, that exists in a folder, say c:\Users\guest\Documents\myfile.txt.
In that file the path strings could look like as follows:
[...]
c:\Users\guest\Documents\Temp\stuff.txt
[...]
"..\..\administrator\readme.txt"
[...]
With this extension you can right-click on such a path and choose open file under cursor and VSCode will open a new tab with that file.
Relative paths are always related to the currently open document.