What happens to the dependency versions when a package has a peer dependency?

When a package has a peer dependency, it indicates that the package requires a specific version of another package, but it does not install that package automatically. Instead, it expects the consumer of the package to have the required version already installed.

The correct understanding is that while the versions of the peer dependency can be different from the one specified in the package, they must remain compatible. This compatibility ensures that the peer dependency can work well with the package utilizing it. Therefore, versions of peer dependencies have more flexibility compared to direct dependencies, allowing for some level of variance as long as backward compatibility is maintained.

This concept is particularly important in JavaScript development, where multiple packages might depend on the same library, and ensuring compatibility is crucial for maintaining functionality across the different packages in a project.