Thanks for the response.
My confusion is that on my development system (Linux), the default installation is to run nodered as a service.
The first time this service starts it creates a hidden directory called .node-red and in there a default empty flow file and default settings.js.
If I then enable projects mode by editing the default settings.js file restarting the nodered service. The editor then comes up in project mode. If I then create a project flow nodered creates a projects directory under .node-red and under that another directory that contains the flow file and another settings.js file.
My experience is that the two settings.js files rapidly get out of sync and dependencies stop working.
At that point I get very confused!