The VS solutions I often work with consist of a single executable project (console app, web app) and many class library projects that are all r
According to this old msdn article:
An application configuration file is an XML file used to control assembly binding. It can redirect an application from using one version of a side-by-side assembly to another version of the same assembly. This is called per-application configuration. An application configuration file applies only to a specific application manifest and dependent assemblies. Isolated components compiled with an embedded [ISOLATIONAWARE_MANIFEST_RESOURCE_ID] manifest require a separate application configuration file. Manifests managed with CreateActCtx require a separate application configuration file.
So only dll's with the ISOLATIONAWARE_MANIFEST_RESOURCE_ID set actually use an independent application config, otherwise it's deferred to the main process config file.
For more info on what ISOLATIONAWARE is you can read this other MSDN article that goes more in depth.
ISOLATIONAWARE_MANIFEST_RESOURCE_ID is used primarily for DLLs. It should be used if the dll wants private dependencies other than the process default. For example, if an dll depends on comctl32.dll version 6.0.0.0. It should have a resource of type RT_MANIFEST, ID ISOLATIONAWARE_MANIFEST_RESOURCE_ID to depend on comctl32.dll version 6.0.0.0, so that even if the process executable wants comctl32.dll version 5.1, the dll itself will still use the right version of comctl32.dll.