Manual:$IP

Manually setting this variable to the absolute path to MediaWiki on disk from  was necessary in older versions of MediaWiki.

However, at least since MediaWiki 1.18, manually defining   in LocalSettings.php is no longer needed and no longer works as you may expect.

It will default to the current working directory and it can be used without the need to define it manually.

If you have to override the default value you have to declare the environment variable  .

See the documentation of your webserver for how to do it.

Details
IP stands for Install Path. The variable holds the local file path to the base installation of your wiki. If for whatever reason you want to overwrite its default - make sure you refer to the fully qualified file path. Do not include a slash at the end of the path.

In MediaWiki 1.16 and prior, where the  file still had to be loaded from inside LocalSettings.php, the directory to load it from was determined by the IP variable.

Unlike other variables, the default is set in WebStart.php instead of in DefaultSettings.php.

Setting the   environmental variable can sometimes be useful when running maintenance scripts that are in non-standard directories. (Maintenance scripts by default use the parent of the current working directory as $IP).