I'm fighting with OSX's packageMaker as it doesn't allow me to create a '.pkg'. Instead it's forcing me to make a '.pkg.mpkg'.
This seems like a stupid question I should be able to respond with a couple of google searches, but I'm not being able to find much info about this.
Could anyone explain the main differences between them and if you know the restriction for which you have to use one or the other?
To the best of my knowledge, .pkg files are simple, straightforward Installer packages. However, .mpkg files are very customizable, and can link to multiple .pkg files which the end user can turn on and off in the Installer.
I think the .pkg.mpkg double-extension you're seeing is just a text appending issue. Packages are either .pkg or .mpkg, not a combination of the two.
I believe Collin Allen is correct -- the main difference is that the metapackage can reference other packages. But as to your PackageMaker problem, have you tried Iceberg? It's an alternative (free) that we have had generally better luck with: fewer bugs, easier to understand and use, greater freedom, etc.