The book didn't explain the "local" linking so well, so here goes:
if you want to link to files in the same directory, you can start the href attribute off with "./" like for instance,
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<a href="./file.txt">file</a>
if you want to link to a file in a folder in your current direcotry, it would be simply
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<a href="./folder/file.txt">file</a>
for every proceeding folder level up(for more folder levels up), you add another "." to the "./" like for instance,
if I wanted to link to a file 2 directories up and then in another directory called "xyz" from your source directory called "abc" you would write
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<a href=".../xyz/file.txt">file</a>