I came across Side-by-side Assemblies for the first time today while trying to install a Debug install set to a test machine. I managed it in the end, but was left with several questions:
Essentially, side-by-side assemblies are a way to ensure that a given application will always use a specific version of a DLL, particularly Windows system DLLs (such as the Common Controls), no matter the Service Packs, Updates or new applications installed after it.
Activation contexts are data structures in memory containing information that the system can use to redirect an application to load a particular DLL version, COM object instance, or custom window version.
A starting point for understanding side-by-side assemblies and what they're for would probably be the "Isolated Applications and Side-by-Side Assemblies" reference on MSDN.
Essentially, side-by-side assemblies are a way to ensure that a given application will always use a specific version of a DLL, particularly Windows system DLLs (such as the Common Controls), no matter the Service Packs, Updates or new applications installed after it.
Other links of interest:
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