What does it mean that containment versus reference?

An item can be contained within a hierarchy level or merely referenced from it.

Example: You're building a project brief. The executive summary is contained — it lives inside the document, dies if the document is deleted. The link to the market research report is a reference — it points elsewhere, and the research exists independently. If you embed the entire report inside the brief, you get a 40-page monster nobody reads. If you only link to the summary without containing the key conclusions, reviewers miss the point. The discipline is knowing which pieces belong inside the boundary and which belong behind a pointer.

Try this: Open a current project document or note. Identify three pieces of information that are contained (they live inside this artifact and nowhere else) and three that are referenced (they point to something that exists independently). For each contained item, ask: should this actually be a reference to a shared source? For each reference, ask: is the linked content critical enough that I should contain a summary here? Make one change in each direction.