A package is a grouping of model elements. You can think of it like a folder in a file cabinet. It can contain diagrams of any and all UML types, and constituent definitions. A package can contain subordinate packages as well. Packages 'own' the model elements contained within them, providing a separate namespace for the model element (that is, a class Fred in package A is different than a class Fred in package B).
A model element belonging to one package can appear in another package, and have a relationship with a model element in the second package. So for example, class Fred of package A can appear in package B; when it does, the class name is preceded by the package name in the class symbol's presentation (package A: Fred).
When creating a UML model element, you must specify the package it belongs to. As you create model elements and diagrams, System Architect will automatically fill in the package name if it can ascertain the information; otherwise, you will be requested to provide the package name. For example, if you are drawing classes in a Class Diagram that belongs to a package, every class that you draw will automatically be assigned to the package of the class diagram; however, if you create a class by itself outside of a diagram workspace (for example, through Dictionary, New Definition), you will be required to provide a package name.
You can move classifiers (classes, Use Cases, components, and so on) between packages by simply selecting one or more classifiers in the browser, and dragging them to the desired package.