The complete D365 Finance and Operation Developments are based on these four terminologies (Package, Model , Project and Element). Here is a quick explanation of these four terminologies and how they work in Dynamics 365 Finance & Operations. D365 customization is mainly based on Elements, So for customizing an element we require the knowledge of  Package, Model , Project. Here we describes the basic concepts Package, Model , Project and Element.
What is a Package in Dynamics 365 ?Â
A Package is a deployable container. It contains source files (XML files), resources and DLLs. It is similar to Model store of Dynamics 365. A package can have one or more models. Packages can have references to other packages, just like .NET assemblies can reference each other.You can select one or more packages and create a deployable package, which can be used to move the code from one environment to other. Packages are stored under c:\packages folder. For every model new sub folder will be created under package folder.
Package = Solution.
What is a Model in Dynamics 365 ?Â
Creating model is a mandatory thing for any sort of customization. A model is a design-time concept. A particular model can contain multiple Visual Studio projects. Therefore you can say it is a collection of projects and a single project can have all or subset of elements from originating model. However, association of a project is only with a single model. It is basically a unit of development/customization. Metadata for models is stored locally on an XML file called a descriptor XML.
Model = Collection of Components inside a Solution.
Models are stored under c:\packages folder\Models.
What is a Project in Dynamics 365 ?Â
What is an Element in Dynamics 365 ?Â
An Element is the object in the AOT(Application Object Tree) such as tables, classes, forms etc. Elements in Dynamics 365 for Finance and Operations are stored on disk as XML files; these files contain the metadata and source code for the element. The XML files are the unit of Source Control.
Read More:
A Simple customization in Dynamics 365 Finance & Operations
Microsoft Dynamics 365 Finance & Operation Development Basics