This documentation applies to Avalon 6.4.3+ when matterhorn.media_path is set in settings.xml.
When Matterhorn is running on a different server than Avalon and they don't share the same filesystem (and filesystem paths) for both the Rails web upload directory and dropbox, Avalon uses something called a working file path. The working file path is a copy of the originally uploaded file where Matterhorn has access and at a path shared by both servers. The working file path is stored on the MasterFile so that it can be cleaned up by a background job after the MasterFile has finished processing.
For example, if Matterhorn is running on a different server and Matterhorn's ingest directory is '/srv/matterhorn/ingest' and mounted on the Avalon server at the same location and Avalon's dropbox directory is '/srv/avalon/dropbox' then Settings.matterhorn.media_path should be configured to be '/srv/matterhorn/ingest'.