This option serves to specify the object path, where the compiler looks for object files. {$OBJECTPATH XXX} will add XXX to the object path. XXX can contain one or more paths, separated by semicolons or colons.
For example:
{$OBJECTPATH ../inc;../i386}
{$L strings.o}
will add the directories ../inc and ../i386 to the object path of the compiler. The compiler will look for the file strings.o in both these directories, and will link the first found file in the program. This directive is equivalent to the -Fo command line switch.
Caution is in order when using this directive: If you distribute files, the locations of the files may not be the same as on your machine; moreover, the directory structure may be different. In general it would be fair to say that you should avoid using absolute paths, instead use relative paths, as in the example above. Only use this directive if you are certain of the locations where the files reside. If you are not sure, it is better practice to use makefiles and makefile variables.