Anniversary Edition/Framework
The Anniversary Edition Seven introduced a revised framework which installs into the directory Oni/AE/, separate from any previous Editions, which installed into Oni/Edition/. Following is a rundown of what the Installer is doing, from start to finish. To learn how to make your own mod in the package format used by the AE Installer, see Making a mod package. To understand the material below, you should first be familiar with Oni's data files on a general level, so OBD is recommended reading.
Initialization
When first running the Installer, you will be required to initialize the AE. This is a one-time process that uses OniSplit to break the .dat/.raw(/.sep) files in Oni's GDF into their constituent resources, yielding thousands of .oni files. These files are stored in temporary folders, one for each level. Next, the Installer performs what is called globalization. When developing Oni, in order to save memory, BWest put in each level's data files only the characters, textures, sounds, etc. that were needed. Since we have far more RAM these days, we can make this data available in all levels in order to allow more versatile modding. To do this, the Installer moves many of the .onis that it exported to each specific level's folder into the folder for level 0, discarding duplicates in the process (since many of the same resources were duplicated throughout the original levels' data).
There is a major exception to this globalization, however. Each level's AKEV and all child resources (e.g. all environmental textures), as well as the levels' title, fail and win screens, and LSI, are left in that level's folder. Not only would globalized environmental textures gobble up memory unnecessarily, but if a modder replaced an environmental TXMP that had been globalized into level 0, it would show up in all levels, which can have undesirable aesthetic side effects. So, what data is globalized? Primarily, all characters, their animations (even the ones for specific cutscenes), all sounds, all particles, and any unused textures that were not connected to AKEVs.
Finally, the Installer recombines those re-shuffled folders of .oni files into the .dat/.raw(/.sep) files for each level, saving them in AE/AEInstaller/vanilla/. Note that no data has been altered yet, just the resources reorganized.
Installation
After this, the user can choose some mods to install. When the Install button is clicked, the Installer starts off by deleting the existing .dat/.raw(/.sep) files in AE/GDF to start from a blank slate. It then iterates through each mod package you selected, and sends a command to OniSplit to combine the .dat for that level (in AEInstaller/vanilla/) with the .oni files from whichever packages have files meant for that level. The final .dat/.raw(/.sep) files are then created in AE/GDF.
When one package overlaps with another in some way, such as two packages that provide new textures for the same character, which one will take precedence? The answer is that the Installer goes in ascending order by package number, so if five copies of the same .oni file are encountered one after another in five packages, only the last-encountered one will be used. Thus, a package numbered 11111 will override package 11110 wherever their files conflict, when they are both installed. Note that this is on a file-by-file basis, so package 11111 could be used intentionally to override only certain files in 11110, say, to improve or fix them. On the other hand, this might be an undesirable interaction. It's the responsibility of the modders to be aware when there's an unwanted interaction and to mark their mod as being incompatible with the other one.
XML patching
To read about the purpose of XML patches, visit the page Making a patch mod. Here, we'll simply describe the process by which they are installed. XML patching takes place at the beginning of each mod installation, because the .oni files need to be patched before they are combined back into .dats. Therefore, when about to begin installing the user's selected mods, the Installer looks for any patches (.oni-patch files) in those mods. The .oni-patches are named according to the file they modify, e.g. TRAMKONCOMbk_fw_kick.oni-patch, and placed in numbered folders such as level2_Final/, just like mods with .oni files.
For each file that is to be patched, the AEI looks for the highest-numbered package which has such a .oni file in the same level number; in other words, patches go on top of all .oni mods, thus they have higher precedence than any package does by number -- regardless of the number of the package containing said patch. If there is no copy of that .oni file in any selected mod, the AEI extracts the .oni from the vanilla .dat of the appropriate level (stored in AE/AEInstaller/vanilla/).
Once all the .oni files to be patched have been collected from either the other mods or vanilla .dats, the AEI makes a single temporary patch file which lists inside of it a series of commands to XmlTools to run each individual patch file on the .oni file named by that .oni-patch. This "master patch" is made for performance reasons and should not affect the modder who creates .oni-patches. Read the documentation for XmlTools to understand how the patch files are actually processed. The .oni files having been patched, their containing folder is then combined, along with the folders of unpatched .onis from the other selected mods, into .dats, as described in "Installation".