The shell is a Unix program. Like all other user and system files, it is stored in the filesystem. This program has a special purpose in life: to interface between the user and the kernel, filesystem and utilities which constitute the current installed version of AIX.
Filename expansion is a very useful feature of the shell. Notice that it is not available universally to all programs which can be called from the shell.
The tilde can be used in the shell to represent your home directory. Another possible substitution option is to use variables, either system-defined or user-defined, to support programs which can use relative addressing and can have variables in their logic.
Such substitution of variable contents into the stream of the command you are running is an interesting levels phenomenon.
Notice how the particular substitution we used for tilde worked, as did the use of $PWD, but the values substituted from $PWD include slashes, and the pathname /home/user100/extra/dir_for/usr/bin is not a valid pathname.