I would like to know in what scenarios they are applied respectively
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Doc is a shared documentation system. e.g. if you use docu pages of some framework like React or language like Python you dont need to copy paste the documentation into the prompt. You can setup in your cursor setting the URL to the main page of the docu and it will index it for better selection for AI (RAG is the correct term for selecting best matching info). This index is shared across all cursor users who use the same documentation and saves us from all indexing the same docu separately.
notepad is your local information shared across all projects in your Cursor app. so put there some rules or requirements that you use in all projects. That way you dont need to copy the requirements or details into all projects separately.
otherwise if you want something project specific use .cursorrules or .cursor/rules/ .mdc settings which stay in the project.
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