MACROMEDIA FLASH 8-LEARNING ACTIONSCRIPT 2.0 IN FLASH Manual page 29

In Flash Player 7 and earlier, local SWF files had permissions to access both the local file
system and the network. In Flash Player 8, local SWF files can have three levels of permission:
Access the local file system only (the default level). The local SWF file can read from the
local file system and universal naming convention (UNC) network paths and cannot
communicate with the Internet.
Access the network only. The local SWF file can access the network only (such as the
Internet) and not the local file system where the SWF file is installed.
Access to both the local file system and the network. The local SWF file can read from the
local file system where the file is installed, read from and write to any server that grants it
permission, and can cross-script other SWF files on either the network or the local file
system that grant it permission.
For more details about each level of permission, see
on page 679.
There are also minor changes to System.security.allowDomain and improvements to
System.security.allowInsecureDomain. For more information on local file security, see
Chapter 17, "Understanding Security."
"About local file security and Flash Player"
Changes to security model for locally installed SWF files 29