Packaging does not affect the highlighted circuitry. However, after packaging circuitry into a new cell, that circuitry can be deleted and replaced with an instance of the cell.
The opposite function is the removal of levels of hierarchy. This is done with the Extract Cell Instance subcommands (in menu Cell), which takes the currently highlighted cell instances and replaces them with their contents. The One Level Down subcommand just replaces the selected instances with their contents. The All the Way subcommand continues to extract instances inside of instances until there are no more instances, just primitives. The Specified Amount... prompts for a number of levels of hierarchy and extracts that many levels deep. All arcs that were connected to the cell instances are reconnected to the correct parts of the instantiated circuitry. Note that extraction works only with layout cells; it cannot be used with schematics.
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