When you see the : in PHP.ini, it is being used as a delimiter to separate multiple different paths. When PHP tries to [man]include[/man] some file:
include 'foo.php'
Then it will search in a bunch of different places for that file. I'm not sure what the exact sequence is, but I believe it will first search relative to the current working directory (usually the directory of the PHP file being executed), then relative to the file that does the include (keep in mind that included files can themselves include other files), then it will search all those directories in the include_path. Here's what the documentation says:
Files for including are first looked for in each include_path entry relative to the current working directory, and then in the directory of current script. E.g. if your include_path is libraries, current working directory is /www/, you included include/a.php and there is include "b.php" in that file, b.php is first looked in /www/libraries/ and then in /www/include/. If filename begins with ./ or ../, it is looked for only in the current working directory or parent of the current working directory, respectively.
You can find out what the current include path is using this:
$var = ini_get('include_path');
It will return a string that contains a list of directories where PHP will search when trying to include a file.
On my machine, it returns this:
.:/usr/share/pear
If I list the contents of /usr/share/pear, I can see all the pear stuff is in there:
[root@machine ~]# ls -l /usr/share/pear
total 108
drwxr-xr-x 2 root root 4096 Oct 12 2007 Archive
drwxr-xr-x 2 root root 4096 Oct 12 2007 Console
drwxr-xr-x 3 root root 4096 Oct 12 2007 data
drwxr-xr-x 3 root root 4096 Oct 12 2007 doc
drwxr-xr-x 2 root root 4096 Oct 12 2007 OS
drwxr-xr-x 11 root root 4096 Oct 12 2007 PEAR
-rw-r--r-- 1 root root 14778 Jan 6 2007 pearcmd.php
-rw-r--r-- 1 root root 34264 Jan 6 2007 PEAR.php
-rw-r--r-- 1 root root 1800 Jan 6 2007 peclcmd.php
-rw-r--r-- 1 root root 19369 Jan 6 2007 System.php
drwxr-xr-x 3 root root 4096 Oct 12 2007 test
drwxr-xr-x 3 root root 4096 Oct 12 2007 XML