I've downloaded a family and a Sim, and wondered why they didn't work in my game - turns out they're .package files... i put them in my mods folder and still nada. Anyone know why?

There's nothing to extract, they're package files

You said that you downloaded a family. Does the download say that they are households or are they supposed to be individual Sims? Did you download them as sims3packs or did they come as .package right from the start? How did you install them?
If they are households then you should place them in Library instead of SavedSims. If they are Sims but came as .packages then try renaming them from ".package" to ".sim".

They were .package files from the very start. I tried putting them in the saved sims folder but nada. I'll try renaming the single ones to .sim packages and put them back into the saved sim folder and report back

So putting the family in the library worked - but changing the .package to .sim files for the single sims didn't work. Unsure why they were even put as .package files in the first place!

Have you tried to open this questionable package file in S3PE and look into?
Maybe someone just packed .sim files (with other resources maybe >.> (but why???) ) into this container. In such case - just extract sim file into SavedSims and the file itself (minus extracted file - delete it) put into Mod/packages. If there're some resources and you want them.

It may simply be because that Sim is saved as a household, too, or does it not show up when placed in Library either?