The clearest explanation I found was not in the current 2.4 apache docs, but in version 2.0.
# /abc/def/.htaccess -- per-dir config file for directory /abc/def
# Remember: /abc/def is the physical path of /xyz, i.e., the server
# has a 'Alias /xyz /abc/def' directive e.g.
RewriteEngine On
# let the server know that we were reached via /xyz and not
# via the physical path prefix /abc/def
RewriteBase /xyz
How does it work? For you apache hackers, this 2.0 doc goes on to give "detailed information about the internal processing steps."
Lesson learned: While we need to be familiar with "current," gems can be found in the annals.