What occurs in the background when an application such as Skype is installed e.g. logs, synchronization, etc? When I install an application, what happens in the background, where is the application installed, where are its preferences stored, where is information such as usernames and passwords stored, etc?
where is the application installed


The .apk file is put into /data/app (see: Where in the file system are applications installed?)


  where are its preferences stored


This depends on the application. If it uses the SharedPreferences classes then they go in /data/data/&lt;app's package name&gt;/shared_prefs, but they could feasibly be stored anywhere the app can write data to (i.e. all of /data/data/&lt;app's package name&gt;, the SD card, etc).


  where is information such as usernames and passwords stored


This also depends on the app. Most often, probably somewhere in /data/data/&lt;app's package name&gt;. They could also use AccountManager APIs (the app must request this permission) which I believe will use the /data/system/accounts.db database.