On this page Structuring Multi-Project Builds the diagram shows a libs.version.toml file at the top of the git repository.
On this other page Version Catalogs, the libs.version.toml file is under the gradle/ folder.
Isn’t that confusing a little?
I would say the image does not show paths at all, but logical structure, showing that you have one version catalog in the root project level.
I’d say the main problem is, that in the directory structure right below the graphic, the version catalog is missing where the path to it would then be specified. That would hopefully clear up the confusion.
Besides that those graphics are wrong anyway. For example they call buildSrc a sub-project which it is not. It is a separate build that behaves to great lengths like an included build, but it is neither an included build, nor a sub-project.