For a long time, packaging an integrated circuit was just a means to protect the chip, also known as a “die,” by encapsulating it in a supporting case and connecting it to the outside world with electrical contacts. These chips were in turn mounted on printed circuit boards (PCBs) which interconnected them, providing paths for their signals to move around, as well as feeding the power to run them. Most of the innovation took place within the design and manufacturing of the chips, and over time as they got more complicated, designers added more and denser contacts to support more signals and connections.
With billions of transistors on a single chip, that has meant complicated advanced processes for designing and producing them, which has gotten very expensive and risky. This has driven a surge in interest in ways to combine mixed die using different manufacturing processes into a single package. If designers could do that, it would accomplish several things. You could use the expensive advanced processes only for the most performance sensitive pieces, relegating other parts of the design to older and cheaper processes. You could also combine new chips with parts that you have already made that you know work (and are cheap). Putting multiple chips close together in a single package also reduces propagation delays – the time it takes for electrical signals to move between chips, which is significant when you are chasing high performance. Thus advanced packaging can enable innovative mix-and-match combinations that would get to the market much faster with lower risk.