There are 2 options available on the right mouse menu in the package explorer. One is to show packages in a flat view, the other in a folder view. The flat display minimizes the number of items displayed and the folder view shows all the package levels as discrete folders. In either event, the package shows as "hollow" if it's an empty folder and as "filled" if there are one or more java classes defined in it.
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subject: Eclipse Workspace, can you collapse a package directory structure?