Confusion with ROOT_URLCONF

I don't understand how ROOT_URLCONF is declared in settings.py. If I
put all my apps (and my settings.py file) in a directory "foo", I'm
supposed to do:

ROOT_URLCONF = "foo.urls"

This seems counter-intuitive to me. When I run my app (by running
"python manage.py runserver"), I'm already in the "foo" directory.
From there, shouldn't you just need to do "import urls", not "import
foo.urls"? Is the server doing a "cd .." at some point before it
starts running my code?

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