So what is a package? You're looking at one.

This is a cross-section of the iPhone's ARM processor + RAM package. Click here to see it in its full, 2854x313 glory.

The processor itself is the center rectangle. The silver circles underneath it are solder balls.

The two rectangles above the processor are RAM dies. They are offset from each other to make room for the wirebonds, which you can't see in this shot.

Having the RAM so close to the processor both reduces latency—making RAM access faster—and cuts power consumption, helping your battery last longer.