Answer
The package install location is determined by the type inside composer.json of the respective package. Currently, the following types are used:
-
typo3-flow-framework- reserved for Flow Framework; installs insidePackages/Framework -
typo3-flow-site- a Neos site. Installs insidePackages/Sites -
typo3-flow-package- a Flow package which is not the Flow Framework itself. Neos itself is in this category, as well as many packages you write yourself. -
typo3-flow-plugin- a plugin inside Neos. No technical distinction fromtypo3-flow-package. -
[others]- installed intoLibraries- all composer packages which do not depend on the Flow Framework, f.e. make no use of the Dependency Injection.
Almost all of your packages will be of type typo3-flow-package and thus live in Packages/Application.
This has consequences for the project setup; see best practice project structure for further information.


