Rust

If you want your module to contain submodules, it needs to go into a folder. That folder needs to be named like the module.

It's explained pretty well in the book, imho: https://doc.rust-lang.org/stable/book/ch07-02-defining-modules-to-control-scope-and-privacy.html

So, for your example, the file structure could for instance be
src/main.rs
src/separate_file1.rs
src/separate_file1/separate_file2.rs

An alternative layout that I think is more common would be
src/main.rs
src/separate_file1/mod.rs
src/separate_file1/separate_file2.rs

Or, if you think separate_file2 could contain submodules at some point, maybe
src/main.rs
src/separate_file1/mod.rs
src/separate_file1/separate_file2/mod.rs

Best to not think of files as modules. Instead a rust crate is just a tree of modules with the src/main.rs or src/lib.rs being the main entry point.

Inside these files you define the module structure you want like:

mod foo {
    mod bar {}
}

This creates two modules, crate::foo and crate::foo::bar. Now, because you don't want to have all your code in main.rs/lib.rs rust lets you move the module contents to separate files. But the location of the file needs to match its location in the module structure - from the crates root (not the file it was declared in).

So when you call mod foo; from src/main.rs it will look for src/foo.rs or src/foo/mod.rs (and you can only have one of these). And the foo::bar - no matter if that is declared in src/main.rs (as above) or inside src/foo.rs or src/foo/mod.rs, it will always look for the bar module contents inside src/foo/bar.rs or src/foo/bar/mod.rs as it is nested inside the foo module - not because the file is next to the current one.

This means if you had this inside main.rs/lib.rs:

mod foo {
    mod bar {
        mod baz;
    }
}

Then it will look for the baz module contents inside src/foo/bar/baz.rs or src/foo/bar/baz/mod.rs - even though those might be the only two files you have.

What do you mean by "doesn't read from the same directory"? Is part of your application's function to read in data from files in your project's directory tree?

Without seeing the directory structure of your project, or some more actual code samples its hard to understand how to help 😅