When Windows encounters an unquoted path it tries all possible paths, from shortest to longest. Thus C:\Program Files\Application Path\App.exe will cause Windows to look for the following executables, in order:
C:\Program.exeC:\Program Files\Application.exeC:\Program Files\Application Path\App.exe
If an executable is found on a shorter path, then the remainder of the (unquoted) path is treated as command line parameters.