I've seen popping up around the web recently .application files, for .NET installations. (Application manifests, per the extension details).
How exactly does one create these .application files in Visual Studio, and how do they differ from a standard windows setup? Please enlighten me.
I'm a C# developer, but never used a .application installer before.
How exactly does one create these .application files in Visual Studio?
.application file is automatically created when you do a click-once deployment.
For click-once deployment, you can
Right click on the project you want to release and choose publish menu item.
-- or --
Right click on the project, select properties, go to publish tab to publish.
how do they differ from a standard windows setup?
You would create a standard windows setup program by creating a setup project in your solution. And also they differ in a way that, for click-once, end-user does not have to install the program on their local machine. You can learn more about differences between them from MSDN