If you have say App.exe -> DllA -> DllB, i.e. DllA uses DllB and App does not directly reference DllB. If DllA and DllB have been moved out of the application base directory then App.exe.config must be edited to provide separate location information for both DllA and DllB and there is no assumption that DllB now resides in the same place as DllA.
Think of it like this: There is one process and the code in DllA executes in the context of that process. When code in DllA needs to call code residing in DllB then that assembly is loaded by 'the process' whose default locations are the GAC and the application base directory. Overrides to this default behaviour are on a per assembly basis.
Any information contained within *.dll.config is not read automatically and will be ignored.
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