"Component" has a particular meaning for the Microsoft® Windows® installer. A component is the smallest piece of an installation handled by the Windows installer. A component is also a building-block of an application or feature from the programmer's perspective.
Windows installers, including those authored with Microsoft® Visual Studio® Installer, always install each component as a single piece. Each component, with all its contents, belongs to one directory or folder.
Microsoft recommends creating single-file components in Visual Studio Installer. Visual Studio Installer installer projects can contain no more than 1,600 components.