Think of nodes as a way of grouping like products together. The most obvious grouping is one product that has variations in size, color, etc. In Drupal Commerce every variation is a product and to group them properly, we use Product Displays.
"Product Display" is the default content type that Commerce Kickstart 1.x creates and it has a product reference field. Technically, any entity that has a product reference field could be considered a product display. Nodes are the obvious product display entity type, and they're privileged because they're the default and standard entity type to use for the front-end display of content. But you could use taxonomy vocabularies, or even users as product displays.
A product in Drupal Commerce can represent one of several things:
Depending on the product and the site’s needs, products may be displayed on unique pages, on pages grouping multiple products together (e.g. all the sizes of a t-shirt), on multiple different pages or Views, or not at all. For this reason, Drupal Commerce enforces a separation between the definition of a product and the product display.
This separation allows you to:
The settings for attribute fields are built into the field edit form. These are typically List fields and Taxonomy term reference fields, because they have a discreet number of options. Attribute fields can use select list or radio button widgets on the Add to Cart form.
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