When you import a module, Node first checks to see if you imported a core node module such as fs or http.
import fs from 'fs';Then it checks to see if you've entered a path to a file. Lets pretend we have a file named app.js.
import App from './app';Then it checks to see if the term you imported is in the nearest parent node_modules folder. This will occur if you import a bare specifier, a file or folder name without a listed path, such as react.
import React from 'react';Node looks in the current file's parent folder's direct children for a node_modules folder that contains a direct child folder with the name of the bare specifier you imported. If it doesn't find that, it proceeds to look for a node_modules folder in its grandparent directory and continues until it can't find a parent directory.
If you're reading this, you use a package manager and you haven't used yarn pnp, you're probably used to seeing a node_modules folder in your apps root directory. Therefore, your app will work because when you import a package node will eventually check your root directory and find the package name you entered in your import statement.