I played with it briefly, producing the following. It just ignores all but the last element of the package name and looks in the cwd (for our local namespace SD::)

# Hack for sketching
use lib '/home/bsb/sb/lib';
BEGIN {
    # look in cwd first
    unshift @INC =>
        sub {
            $_[1] =~ m!^SD/(?:.*/)?(.*)! || return;
            #print STDERR "Loading $_[1] $1\n";
            open my($f), $1;
            #$INC{$_[1]} = "./$1";
            $f;
        };
}
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More generally I think subs in @INC allow for remote or database calls to load your code.

Brad