Jason iscompletely right. This is called a "Relative path" because you are talking about the location of a file RELATIVE to the one you are currently in. This is the preferred way of coding your site because you can move the webpage around and still have all the links/images/etc continue to work fine.
The opposite of a relative path is called an "Absolute Path." This tells the browser EXPLICITLY where the file is located. C:\webpage\image.jpg or
http://www.mysite.com/image.jpg are examples of absolute paths.
As you might be able to see...absolute paths can cause problems. What if you upload your site to an internet hosting company? I'd be willing to bet your picture isn't going to wind up in C:\webpage\image.jpg (especially because they are likely to be using Linux based servers!)
Or what if you change the name of your website? Now it is
http://www.mynewwebsite.com. Again, you will have to go back through all your code again and update the paths.
I tend to get the two mixed up, but think of:
../ "Current Directory"
./ "Back One Folder"
You can chain multiple ./'s together too:
./././images/image.jpg would take you backwards 3 folders in the file tree, then go into the "images" folder, and finally get image.jpeg
More reading can be done here:
http://webdesign.about.com/od/beginningtutorials/a/aa040502a.htm
