That all made sense to me, though of course it would be nice to be able to designate more or less space for the application partition, or the user partition, or caches, etc, as needed.
On the N5, I don't think it works like that. I saw some posts suggesting that the N5 has multiple mounted filesystems for various tasks as above (system data, app data, installed APKs, caches, user files, etc) but that they are dynamically resized somehow. How does this work? Is it documented somewhere? Do I really need to care, or can I just start installing 1GB+ APKs with abandon? Why do they do this instead of mounting one partition on / and just having sub-directories for /system, /data, etc?