My layman's understanding is [...] just trying out my understanding after a year of reading and getting confused by it.
Perhaps this may help. There are basically 2 methods for installing parts on a TCd aircraft: as a replacement part which needs to be an approved part per Part 21, or as a Part 43 alteration.
On the approved part side, a person/vendor who wishes to produce parts for TC’d aircraft must obtain a design/production approval for that specific part per one of several methods: STC (design only), PMA (design/production), and TSO (design/production). Some vendors use all three processes, some two, and some one depending on the part type and market they wish to pursue.
A TSOA provides both a design and production approval per one of the existing Technical Standard Orders which is a rather limited listing and does not provide a method for all parts. However, in addition to a limited use, a TSO does not give an installation approval to any aircraft as noted in your red text. The Part 43 installer must determine/obtain that installation approval whether through a logbook entry or minor/major alteration.
A PMA also provides a design and production approval and is required for each individual part to be produced. So if you want a widget for multiple aircraft models you would need to follow the entire process for each model which can be expensive. And given the PMA is model specific it also provides an installation approval unlike a TSO part that does not.
The STC is only a design/installation approval. So while you can get that design approved through the STC process, which is more refined than the PMA design process, the STC does not give you the approval to produce (Mfg) that part. Hence the reason you see STC holders using the PMA/TSO approvals to produce their STC designed parts. While that sounds confusing, the STC design process actually can have more benefits than the PMA/TSO design process. For example, given there are basically 4 different types of STCs, an AML-STC will allow a single baseline design approval to be used across multiple aircraft models and TCs which is a huge cost saving when compared to the PMA design process for each specific model.
Now on the Part 43 alteration side, the part needs no existing approvals as that is what the alteration sign off will provide. So in general, anything can be installed on a TC aircraft. Anything you want. Now whether that installation is considered a minor alteration, or a major alteration, or a major change to type design it is the Part 43 installer who determines what approvals are needed. However, when a major alteration enters into the major change to type design territory, only the FAA ACO/MIDO offices can grant that approval through the STC or ATC process. So you can see the STC process is rather unique and can be used to approve the Part 21 design of replacement parts, in addition to, provide the approval for certain Part 43 aircraft alterations.
It may appear a bit confusing to the layperson, but there are several methods to the madness which are pretty straight forward once you’ve ran through them a few times.
