Normally you would put your package object in a separate file called package.scala in the package that it corresponds to. You can also use the nested package syntax but that is quite unusual.
The main use case for package objects is when you need definitions in various places inside your package as well as outside the package when you use the API defined by the package. Here is an example:
// file: foo/bar/package.scala
package foo
package object bar {
// package wide constants:
def BarVersionString = "1.0"
// or type aliases
type StringMap[+T] = Map[String,T]
// can be used to emulate a package wide import
// especially useful when wrapping a Java API
type DateTime = org.joda.time.DateTime
type JList[T] = java.util.List[T]
// Define implicits needed to effectively use your API:
implicit def a2b(a: A): B = // ...
}
Now the definitions inside that package object are available inside the whole package foo.bar. Furthermore the definitions get imported when someone outside of that package imports foo.bar._.
This way you can prevent to require the API client to issue additional imports to use your library effectively – e.g. in scala-swing you need to write
import swing._
import Swing._
to have all the goodness like onEDT and implicit conversions from Tuple2 to Dimension.