Claude Skills: full context loading or silent truncation beyond level 3?

Hey everyone, I’m trying to get a clear answer about how Skills in Claude code actually work when navigating reference files.

Let’s say Claude is working within a Skill that’s nested three levels deep, and it opens a reference file (like file.md).
My question is: does Claude always load the full file into context, or does it start truncating (for example, only loading the first ~100 lines or “head 100”) when going beyond a certain depth or number of references?

I’ve heard conflicting explanations, some say that after level 3, Claude starts using only partial context from reference files to manage memory.

If anyone has done some deep testing or has internal insight into how Skills manage file context depth and reference expansion, I’d really appreciate your input.

Thanks in advance!