The basis about library

As I said in my last reply, yes "library" word in the code is the pointer but not to source code if that is what you mean by entity.

It points to a folder that has in it already precompiled types declared, components declared, functions declared, entities declared...etc. including those that belong to vendor lpm or ips.

If you are thinking it is just adding those entities as source code as you will do with another user's code to be added to your project then the answer is no. With vendor lpm, ips you need to follow their approach based on precompiled libraries.