Files are included based on the file path given or, if none is given, the include_path specified. If the file isn't found in the include_path, include() will finally check in the calling script's own directory and the current working directory before failing. The include() construct will emit a warning if it cannot find a file; this is different behavior from require(), which will emit a fatal error.
If a path is defined — whether absolute (starting with a drive letter or \ on Windows, or / on Unix/Linux systems) or relative to the current directory (starting with . or ..) — the include_path will be ignored altogether. For example, if a filename begins with ../, the parser will look in the parent directory to find the requested file.
For more information on how PHP handles including files and the include path, see the documentation for include_path.
When a file is included, the code it contains inherits the variable scope of the line on which the include occurs. Any variables available at that line in the calling file will be available within the called file, from that point forward. However, all functions and classes defined in the included file have the global scope.