PR #8783 addressed #3500, which brought the ability to define symlinks whose targets are defined as relative paths.

On Unix-like platforms, symlinks aren't typed; the symlink behaves as if it were the same type (file or directory) of whatever type its target is.

On Windows, by contrast, you must explicitly match the target type at symlink creation time for symlinks to directories to act like directories.
Since New-Item currently does not allow you to specify a symlink type - enum value SymbolicLink is currently the only option - it must itself infer the appropriate type based on the specified target.

As an aside: Since this inference requires that the target already exist, creating symlinks to non-existing targets - which is a legitimate use case - presents a conceptual problem that must be solved separately - see #9067

Currently, the inference doesn't work if the target is specified as a relative path to an existing target directory.

Steps to reproduce (on Windows)

Note: If you don't have developer mode enabled, run the tests as admin (elevated).

Describe "New-Item: symlink with relative path test" {
  BeforeAll {
    Push-Location TestDrive:/
    # Create a directory...
    $null = New-Item -Type Directory someDir
    # ... and a symlink to that directory, as a sibling, using a *relative* path.
    New-Item -Type SymbolicLink someDirLinkRelative -Target someDir
    # ... and a symlink to that directory, as a sibling, using a *relative* path.
    New-Item -Type SymbolicLink someDirLinkAbsolute -Target (Convert-Path someDir)
    # Echo the symlink target information.
    Get-Item someDirLinkRelative, someDirLinkAbsolute | Select LinkType, Target | Out-String | write-verbose -vb
  }
  AfterAll {
    Pop-Location
  }
  
  It "Symlink with absolute path to existing directory behaves like a directory." {
    (Get-Item someDirLinkAbsolute) | Should -BeOfType System.IO.DirectoryInfo
  }

  It "Symlink with relative path to existing directory behaves like a directory." {
    (Get-Item someDirLinkRelative) | Should -BeOfType System.IO.DirectoryInfo
  }
  
}

Expected behavior

Both tests should succeed.

Actual behavior

The test with the relative target path fails.
That is, a file symlink rather than a directory symlink was mistakenly created.

Environment data

PowerShell Core v6.2.0-rc.1 on Microsoft Windows 10 Pro (64-bit; Version 1803, OS Build: 17134.590)