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It provides information to other Adobe apps for their "Edit Original" commands.
I exported a short DV AVI with a project link embedded from Premiere3. I then opened the AVI in Premiere2 and said "Edit Original", it then proceeded to open Premiere3 and the project appeared the same as the WHOLE original project.
Am I correct to assume that will only work if I have all my source files in the same place or on the same computer.? ie I can't give this file to a another editor with Premiere and open it and edit original if he does not have any of the original media on his system?
I haven't tried that, but logically, it should open properly, with any assets that can't be located showing up as offline.
You would be better off using the Project Manager to collect your files, because no, none of the footage will be available unless you sent it over manually, and at that point, using Project Manager makes more sense.