What is the difference between the Eclipse Package Explorer and the Eclipse Project Explorer?

According to the Eclipse help, the Project Explorer

provides a hierarchical view of the
artifacts in the Workbench, which is
customized by the specific
configuration of your Workbench.

With only the Java Developer Tools (JDT) installed, Project Explorer nearly looks and behaves same for Java Projects as the Package Explorer (including refactoring and other source code operations in the Context Menu). But Project Explorer is usable for other languages and project types as well.

Additional plugins contributes “extra information” to the Project Explorer view making it much more “sophisticated”.

For example: if you have Dynamic Web Project and web tools installed, Project Explorer shows you additional tree nodes like Deployment Descriptor & JavaScript Resources. You can see (and configure) all available contributions in Project Explorer / Customize View… / Content.
If you use SpringSource Tool Suite 2.1.0, have additional nodes for web projects, spring beans and web services.

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