The current directory in the UI is the directory open in whatever window you're clicking on.

That's a purer form of current directory than cmd, which has one per drive.

Yep, the first version of DOS wanted to be "like CP/M but on 8086 with a 640k address space" so it had drive letters and the second version wanted to be "like Unix but single user and with a funny memory model" so it had nested directories!