When you are using relative URLs across multiple subdirectories, it becomes easy to use the wrong relative path. This is one good reason to always use absolute URLs . No need to worry about moving things around and goofing the relative path. As such, images will not be cached. Image caching refers to the browser recognizing that it already has the image in memory, thus you do not have to wait as long for it to download again.
Image caching can save a large amount of time.
If you have a dynamically generated site, a single site menu may be included at different directory levels. A loosely related topic is that of backing up your web site files. Many people fall into the trap of relying on their web site's server to not crash or their files to not become corrupted. There are many other situations that we could come up with, but you probably get the idea. If you do all your site work on your own computer and upload the finished files to the server, then you always have at least one backup.