Essentially, four different things can be deployed using WSS solution packages.
Assemblies. Many development tasks in SharePoint require custom code to be compiled into assemblies and added to the server. This assemblies can be deployed to a particular SharePoint extend web application's bin folder or the server's GAC.
Anything to the SharePoint 12 folder. There there are many options within the WSS solution package schema, most boil down to deploying files to specific places in SharePoint 12 folder structure. When there is no schema option when a project requres deploying a file somewhere in SharePoint 12 folder structure, developers can always fall back on the
Custom Code Access Security policies. CAS plicies are typically stored in the [..]\12\config folder, but what is special about the WSS package deployment method is that developers include what additions to make a CAS policy and SharePoint adds the changes to a copy of the currently used CAS policy. This automatically updates the SharePoint extended web appliction's web.config file to contain a registration to the new CAS policy file, and changes the trust level of the web appliction all at once.
Web Part definitions and resources. Deployment of web parts can include many different files. Web Part definition files(*.webpart) can be deployed to a site collection's web part galary (to deploy a web part to a specific site collection) or to the wpcatalog directory within a web application's webroot on the file systems( to deploy the web part to all site collections within a sharepoint extended web application.)