A septic tank provides primary treatment only: it settles solids and allows the liquid to pass to a percolation area. A packaged wastewater treatment system adds a secondary treatment stage, usually with aeration or a filter medium, producing a cleaner effluent that can be discharged to a smaller or less permeable percolation area.
A septic tank is a simple settlement chamber. Solids settle and are retained, scum floats, and the partially treated liquid flows out to the percolation area, where the soil does the real treatment work. Because the effluent is relatively strong, a septic tank needs suitable subsoil and a properly sized percolation area to work safely.
A packaged treatment system adds mechanical or biological secondary treatment, so the effluent leaving it is much cleaner. This means it can often be used on sites where a septic tank would not be acceptable, such as those with thinner subsoil or a higher water table, though it needs power and regular servicing.