Hi:
It has always been my understanding that the Stored Process Server and the Workspace server did not have any visibility of files on the user's local machine.
So, for example, if someone sends you a file of data and you save it to c:\temp\month7.dat, you cannot run a Stored Process against the local file as long as it is "down" on your local machine. You need to upload the file to a server location and in most instances, the Stored Process program would probably be hardcoded to look for a file with the name:\\srvname\dir\month&mm..dat where the macro variable &mm was set by the stored process program logic or by a simple input parameter for month.
Of course, this means that one month you couldn't name the datafile "mnth7.dat" and the next month call it "month8.dat" and then "mon9.dat" -- there would have to be some structure and regularity to the file names. However, this is not an answer as to WHY or HOW you'd use the File Name Parameter type.
When I was working on the stored process course, I could never figure out a good use-case for this parameter type. I've been working with Stored Processes and teaching the material ever since the first stored process course. All I can do to contribute to this discussion is share my experience that when questions come back to me about stored processes, I don't get questions about folks wanting to use the File Name parameter type.
If the user is insistent on some kind of answer for how or why one might use this parameter type in a stored process, you might ask Tech Support whether they have an example.
cynthia