It's my understanding that the mods merely replace files.
Poopy.sim is the stock file.
Mod A is installed, and contains a tweaked Poopy.sim. The stock file is backed up, and Poopy.sim from Mod A overwrites it.
If Mod B is then installed, and Mod B has its own Poopy.sim file, it will presumably backup the Mod A one, and install B instead.
I have no idea if the backup of Mod A's file will then overwrite the REAL default file in backups, or if it is given a new name.
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