Clearly document the distinction between local packages and dependencies

[mgsloan]

Split off from #1217. Should be done after #863, #849, and #1265, as those will change things a bit.

It would also be good to consider terminology. I use the term "local packages" for the non-dependencies in packages, but perhaps they should be referred to as "project packages".

[mpilgrem]

I am closing this issue given the passage of time and the changes to the online documentation in the interim.