Simple import question

[WhatMeWorry via Digitalmars-d-learn]

Hope this question is not too simple minded but,

In the TDPL it says:

"To import one module from another, specify the name of the 
module in an import declaration. The name must include the 
relative path computed from the directory where compilation takes 
place"


Ok, but how does one determine where compilation takes place?
Is it:
1) The directory where main() resides.
2) The directory where the executable resides after it is built.
3) The directory of where the dmd compiler is at.