To edit an xref or block reference in place
If the object you select in the reference belongs to any nested references, all the references available for selection are displayed in the Reference Edit dialog box.
The reference file is locked to prevent multiple users from opening the file at once. You cannot edit a reference in place if the drawing file is being used by another user.
The objects that you select become the working set. By default, all other objects are locked and faded.
The objects in the working set are saved to the reference and the xref or the block is updated.