In a subfolder within a vault, insert an explicit relative link [[./x/y]]. Hover-preview the link and click to open it, or use the open link under cursor command.
Expected result
A note x/y.md is created in a subdirectory of the folder the note is in, and the note is opened
Actual result
The operation silently fails after creating x/y.md under the vault root.
Environment
Operating system: Windows
Obsidian version: 0.12.19
Additional information
It doesn’t matter what the link creation setting is set to.
This is part of broader issues/not yet implemented features around relative links (especially important with standard markdown links in relative path mode).