awk print output to a directory using shell argument or shell variable

<sup>Note:
* This answer addresses the question as asked, based on a stand-alone awk script that uses a shebang line (#!/usr/bin/awk -f).
* Ed Morton's helpful answer shows how to call awk from a shell script as an alternative, which has its advantages.</sup>

All operands passed to awk that come after the script operand (which is implicitly the stand-alone script itself, in this case) are by default interpreted as input files.

Given that ./outputdir/ is by definition a directory, it can't act as an input file, which is why you're getting the warning.

However, Awk offers pseudo-filename-operand syntax <var>=<value>, which, instead of passing a filename, defines an Awk variable, analogous to the the pre-script -v <var>=<value> option syntax (and given that your invocation is by shebang line, the -v-option-based variable assignment is not an option).

Note that these assignments happen as they're being encountered in the list of post-script operands, so you need to place them before actual input files whose processing relies on them:

shelloutputdir="./outputdir/"
./testawk odir="$shelloutputdir" inputfile.txt # Note the definition of variable `odir`

^{There is no limit on the number of variables you can define this way, but, at least hypothetically, you're limited by the maximum overall length of the command line, which is value close to, but less than what getconf ARG_MAX reports.}

The above defines Awk variable odir, so your script needs to reference that:

#!/usr/bin/awk -f
{
    fn3="outputfile3.txt"
    print FILENAME > (odir "subdir/" fn3)
}

^{As Ed Morton points out, if the output filename is calculated from an expression, that expression should be enclosed in (...) for robustness; while it may also work without the parentheses in some Awk implementations (e.g., GNU Awk and Mawk), it will break in others (e.g., BSD/macOS Awk).
The Awk POSIX spec does not regulate the behavior in this situation.}

1. How do I explicitly set the output directory in awk?

There is no Awk-internal mechanism, but you can use the shell to cd to the output directory beforehand.

2. How do I use a command line parameter to set the output directory in awk?

See solution above. There is no special output-directory parameter in Awk, but you can pass the output-directory path as an Awk variable.

3. How do I create a directory if it does not exist in awk?

There is no Awk-internal mechanism, but - if creating the dir. ahead of time in the shell is not an option - you can use the system() function to invoke mkdir; e.g.:

# If the dir. name never contains ' (single quotes):
awk -v odir="out-dir" 'BEGIN { system("mkdir \047" odir "\047") }'

# *From inside your stand-alone Awk script only*, you don't need \047 to represent
# ' chars - see below.
system("mkdir '" odir "'")

# Otherwise, more work is needed:
awk -v odir="out'dir" '
   function shellQuote(s) { gsub("\047", "\047\\\047\047", s); return "\047" s "\047" }
   BEGIN { system("mkdir " shellQuote(odir)) }
'

\047 is an octal escape sequence representing ', which must be used when calling awk explicitly, from the shell, because '...' is already being used to enclose the script as a whole, which prevent use of embedded ' chars. altogether, because single-quoted shell strings do not support it.

This is one aspect in which a stand-alone awk script has an advantage over explicit awk invocation from the shell: you're free to use literal ' instances in the stand-alone script - no need for \047.

4. How do I pass a shell variable to an awk variable to set the output directory?

See the answer to question #2.