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Extract files from sqlar with a directory prepended
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There is nothing magical.  The shell is processing the command (the entire command given to the shell) in accordance with the rules by which every other shell command is processed by that shell.  The fact that the target executable word happens to be "sqlite3' is quite irrelevant to the process.

The quoting and escaping rules are *exactly* and *precisely* the same as if the target executable word was 'awk' or 'grep' or 'ls'.