Directives within .htaccess files apply to the directory that contains the .htaccess file and all its descendants.

Directives within the file,
/home/dh_xyz45/mycoolsite.com/.htaccess
would apply to all files within and "under" the mycoolsite.com directory for the user dh_xyz45.

Directives within the file,
/home/dh_xyz45/mycoolsite.com/products/.htaccess
would apply to all files within and "under" the mycoolsite.com/products directory for the user dh_xyz45.