See related issue.

In some cases, it is desirable for an annotation to target the property or navigation property of an entity within a particular entity set.

So:
<Annotations Target="myschema.myentitytype/mynavproperty"/>

would target the "mynavproperty" element of myentitytype, while

<Annotations Target="myschema.mycontainer/myentityset/mynavproperty"/>

would target the "mynavproperty" element of an entity returned from the myentityset entity set, and

<Annotations Target="myschema.mycontainer/myentityset/myschema.myderivedType/mynavproperty"/>

would target the "mynavproperty" element of an entity of type "myschema.myderivedType" returned from the "myentityset" entity set.