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An Emacs buffer can have but one working directory, stored in the
buffer-local variable default-directory. A Dired buffer may have
several subdirectories inserted, but it still has only one working
directory: that of the top-level Dired directory in that buffer. For
some commands it is appropriate that they use the current Dired
directory instead of default-directory, e.g., find-file and
compile.
The command dired-smart-shell-command, bound to M-! in
Dired buffers, is like shell-command, but it runs with
default-directory bound to the current Dired directory.