diff --git a/lib/types.nix b/lib/types.nix
index 3fcac9c31b31..bf18866e55e4 100644
--- a/lib/types.nix
+++ b/lib/types.nix
@@ -368,13 +368,21 @@ rec {
       emptyValue = { value = {}; };
     };
 
-    # derivation is a reserved keyword.
+    # A package is a top-level store path (/nix/store/hash-name). This includes:
+    # - derivations
+    # - more generally, attribute sets with an `outPath` or `__toString` attribute
+    #   pointing to a store path, e.g. flake inputs
+    # - strings with context, e.g. "${pkgs.foo}" or (toString pkgs.foo)
+    # - hardcoded store path literals (/nix/store/hash-foo) or strings without context
+    #   ("/nix/store/hash-foo"). These get a context added to them using builtins.storePath.
     package = mkOptionType {
       name = "package";
       check = x: isDerivation x || isStorePath x;
       merge = loc: defs:
         let res = mergeOneOption loc defs;
-        in if isDerivation res then res else toDerivation res;
+        in if builtins.isPath res || (builtins.isString res && ! builtins.hasContext res)
+          then toDerivation res
+          else res;
     };
 
     shellPackage = package // {
diff --git a/nixos/doc/manual/development/option-types.section.md b/nixos/doc/manual/development/option-types.section.md
index c34ac0367c4f..00f1d85bdb61 100644
--- a/nixos/doc/manual/development/option-types.section.md
+++ b/nixos/doc/manual/development/option-types.section.md
@@ -22,7 +22,8 @@ merging is handled.
 
 `types.package`
 
-:   A derivation or a store path.
+:   A top-level store path. This can be an attribute set pointing
+    to a store path, like a derivation or a flake input.
 
 `types.anything`
 
diff --git a/nixos/doc/manual/from_md/development/option-types.section.xml b/nixos/doc/manual/from_md/development/option-types.section.xml
index e16453df51e6..444729292702 100644
--- a/nixos/doc/manual/from_md/development/option-types.section.xml
+++ b/nixos/doc/manual/from_md/development/option-types.section.xml
@@ -43,7 +43,9 @@
         </term>
         <listitem>
           <para>
-            A derivation or a store path.
+            A top-level store path. This can be an attribute set
+            pointing to a store path, like a derivation or a flake
+            input.
           </para>
         </listitem>
       </varlistentry>