Maybe I missed some docs... But I found:

https://www.freepascal.org/docs-html/prog/progsu40.html#x47-460001.2.40

That leaves some questions though...

  {$I C:\test.inc}
- The path in the include file (point 1) is C:\ and that will be searched.
- 2 and 3 will NOT be searched (according to tests)

  {$I foo\test.inc}
  {$I .\foo\test.inc}
  {$I ..\foo\test.inc}
- the path in the include file itself is incomplete, and can't be searched as such
- 2 and 3 seem to be searched, OR RATHER it will search relative to them.

I am not sure, if I had a hidden setting, but it seems to me, there is ONE MORE path that is searched.
- The path in which compilation started (that is the "current dir" / NOT the dir of the main unit/program)

Having

a/tmp/project.pp
    uses unit1 in 'a/tmp/foo/unit1.pas'

a/tmp/foo/unit1.pas
    {$I ./bar.inc}

a/bar.inc

and running
  cd a
  fpc tmp/project.pp

will find "bar.inc" in
- directory "a"  => current dir
- a/tmp/foo  => the dir of the unit (point 2)

I don't know the search order though.

I haven't done tests with extra include path...