(This entry is specific to Unix system.)Before answering the questions, let's recall a few points about shared libraries. Shared libraries can be used by several applications, or other libraries, without phisycally including the library in the application. This can greatly decrease the total size of applications. It's also possible to upgrade a shared library when the application is already installed. Finally, shared linking can be faster.

However, the shared library must be found when the application is started. The dynamic linker will search in a system-defined list of paths, load the library and resolve the symbols. Which means that you should either change the system-defined list, given by the LD_LIBRARY_PATH environment variable, or install the libraries to a system location. This can be inconvenient when developing, since the libraries are not yet ready to be installed, and cluttering system paths is undesirable. Luckily, on Unix there's another way.

An executable can include a list of additional library paths, which will be searched before system paths. This is excellent for development, because the build system knows the paths to all libraries and can include them in executables. That's done when the hardcode-dll-paths feature has the true value, which is the default. When the executables should be installed, the story is different.

Obviously, installed executable should not hardcode paths to your development tree. (The stage rule explicitly disables the hardcode-dll-paths feature for that reason.) However, you can use the dll-path feature to add explicit paths manually. For example:

stage installed : application : <dll-path>/usr/lib/snake
                                <location>/usr/bin ;          

will allow the application to find libraries placed to /usr/lib/snake.

If you install libraries to a nonstandard location and add an explicit path, you get more control over libraries which will be used. A library of the same name in a system location will not be inadvertently used. If you install libraries to a system location and do not add any paths, the system administrator will have more control. Each library can be individually upgraded, and all applications will use the new library.

Which approach is best depends on your situation. If the libraries are relatively standalone and can be used by third party applications, they should be installed in the system location. If you have lots of libraries which can be used only by your application, it makes sense to install it to a nonstandard directory and add an explicit path, like the example above shows. Please also note that guidelines for different systems differ in this respect. The Debian guidelines prohibit any additional search paths, and Solaris guidelines suggest that they should always be used.