How does the Class-path in the MANIFEST.MF file determine the relative location?
1)
Say I have a JAR with a jar inside lib/somejar.jar
When doing it "plain vanilla", you can't have a JAR inside a JAR. You need to either put it outside in a known path relative to the main JAR, or extract the JAR's contents in the main JAR.
But since Eclipse 3.5 you can do this with a builtin trick. Check the 2nd Library Handling option when you choose Export > Runnable JAR file.
When choosing Package required libraries into generated JAR, then Eclipse will add a special classloader which will load those JAR's transparently for you before executing the main class. It's doing that with help of JarRsrcLoader.