Custom reports are stored as report definition (.rdl) files and 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 can execute any valid Transact-SQL 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 the reports reference report parameters of that node. 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 Transact-SQL statement that is contained in the custom report.