What you are describing is called as shell parameter expansion. This means that on evaluation time, bash searches the value of the variable and if not found, would assign the value at the right of :-.

In other words, if AIRFLOW_PROJ_DIR variable is defined (and its value is e.g. /home/me/airflow/project), then your expression would evaluate as /home/me/airflow/project/dags, otherwise, if not defined it will be evaluated as ./dags.

More on shell parameter expansion at: https://www.gnu.org/software/bash/manual/html_node/Shell-Parameter-Expansion.html