We can define the term modular as a type of design or construction, in our context, of computer software. This type of software design involves a set of modules that collectively comprise the whole. A house, for example, can be built as a single structure or in a modular fashion where each room is constructed independently and joined to create a home. With this analogy, you could selectively add or not add modules in the creation of your home.
The collection of modules, in our analogy, becomes the design of your home. Your design does not need to use every module, only the ones you want. So, for example, if there are basement and bonus room modules and your design does not include those modular rooms, those modules are not used to build your home. The alternative would be that every home would include every room, not just the ones that are used. This, of course...
