I was looking at the Yocto Development Manual (Latest), section 4.6.2. Creating Config Fragments.  I was confused about the file statement and the naming of the directory to locate the fragment file until I found a similar discussion in the BSP Guide (lastest) section 1.2.10. Linux Kernel Configuration.

The section there is much more understandable.  I think we need to modify the development manual or have it point to the BSP manual.  The text from there (below) I think is better.  I still think it's confusing about the naming of the subdirectory where the myconfig goes. Maybe a complete example would be good.

For example, suppose you had a set of configuration options in a file called myconfig. If you put that file inside a directory named linux-yocto and then added a SRC_URI statement such as the following to the append file, those configuration options will be picked up and applied when the kernel is built.

     SRC_URI += "file://myconfig"

As mentioned earlier, you can group related configurations into multiple files and name them all in the SRC_URI statement as well. For example, you could group separate configurations specifically for Ethernet and graphics into their own files and add those by using a SRC_URI statement like the following in your append file:

     SRC_URI += "file://myconfig \

            file://eth.cfg \

            file://gfx.cfg"