Implementation
Custom reports stored as report definition (.rdl) files are created by using Report Definition Language (RDL). RDL contains data retrieval and layout information for a report in an XML format. RDL is an open schema; developers can extend RDL with additional attributes and elements. Reports may execute any valid tsql statement within the report.
If Object Explorer is connected to a server, custom reports can execute in the context of the current Object Explorer selection if they reference that node's report parameters. This enables a report to use the current context, such as the current database, or a consistent context, such as specifying a designated database as part of the tsql statement that is contained in the custom report.
SQL Server Manageability Team Blog : Custom Reports in Management Studio
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