I see this all the time in Ruby:
require File.dirname(__FILE__) + "/../../config/environment"
It is a reference to the current file name. In the file
__FILE__ would be interpreted as
Edit: Ruby 1.9.2 and 1.9.3 appear to behave a little differently from what Luke Bayes said in his comment. With these files:
# test.rb puts __FILE__ require './dir2/test.rb'
# dir2/test.rb puts __FILE__
ruby test.rb will output