Mark Wallman
What I am trying to understand is in the example below, how would Maya, Katana etc know where these usd files are to load if I loading this usda file into them.
Relative paths within a USD file are always relative to the directory containing the USD file doing the referencing. This is true for referencing/sublayering/payloading additional USD files, and for referring to textures, volumes, or other external file types.
Just to be explicit, if the file in your example is at /home/user/projects/myproject/assets/usd/file.usd,
add payload = @./meshes/rubbleAndCars_mesh.usd@
Will load /home/user/projects/myproject/assets/usd/meshes/rubbleAndCars_mesh.usd
add payload = @./meshes/set_mesh.usd@</reference1>
Will load /home/user/projects/myproject/assets/usd/meshes/set_mesh.usd
add payload = @../../../urbanDecay/content/usd/meshes/ivyMan_mesh_01.usd@
Will load /home/user/projects/urbanDecay/content/usd/meshes/ivyMan_mesh_01.usd
Hope that helps!