From LQWiki

Packages are a method for distributing software. The purpose of a package is to wrap up all of the files belonging to one piece of software into a single file.

Package management takes this concept a step further by adding dependencies, install and uninstall scripts, default configurations, and version management. For linux, packages generally fall into three major and mostly incompatible package formats:

• Red Hat Packages, known as RPMs, which end in the extension .rpm
• Debian Packages, which end in the extension .deb and are manually installed with the dpkg program.
• Tarballs, such as those used by Slackware

The Red Hat format is the most widespread format, found in Red Hat, Mandrake and many other distributions. The Debian format has gained popularity recently thanks to Debian-based distributions such as Knoppix and Libranet. Slackware recently added scripts for installation and upgrading to newer versions of packages without destroying configuration files.