Ok, to make sure I understand: When I install a package on my site, it's identified by a package key. When I choose "new application" in the site map, I'm creating an instance of that package (with its own, unique package_id) and, simultaneously, mounting it. A "package-aware" application should partition its data by package_id. I can mount the application in several places, and all will point back to the same code and the same data slice. If I create a new application with the same package, the applications will share code but not data.
Joel, you understand very well! Something similar to this wording ought to go on the main site map page or linked as "help" or something. I think a lot of misunderstanding would be avoided if it were.
Jerry ... service contracts are meant to provide a means for a package to announce itself available to fulfill the needs of another package. "package glue". We need more work and thought in this area to think about what it really means to glue packages together under subsites and all that but I think the basic concept's very promising.
