If you highlight some text and then click the link button on the Docs toolbar (it looks like a chain link), you’ll see a dialog open with a list of suggested URLs based on the text you’ve selected.
Matches for your selected word or phrase from within your Google Drive file list are also shown, so if you want to you can link between different documents instead of just to internet URLs.
But you can go further – add extra text into the search dialog to refine your search, before selecting your desired link. In the image shown, the text ‘Alpine Valley’ has been highlighted to perform the original link search. It has then been replaced by ‘Alpine Railway’ to refine the search.