When package instructions call for you to bring to a boil, and then cover, reduce heat and simmer, what do they mean exactly? Low? Medium? Medium Low?
You reduce the heat until the item is no longer boiling. Generaly, it is the LOW setting.
Reduce heat so that it will simmer. What that setting will be depends on what you will be simmering. 
Right on!
Simmer is the point at which tiny bubbles break the surface.
Gah. I suspected as much. The package instructions are worthless.
Besides, “low” is meaningless to us gas stove users. What, you want all instructions to be made just for you, huh, Lib, huh? 
But, yeah, package instructions are pretty worthless. Except, now that I think about it, Rice A Roni instructions were actually pretty good. But they were the exception, of course.
For anything that will scortch to the bottom of a saucepan like sauces you pretty much want it as low as it will go and still see a bubble come up now and again (one here or there every second, maybe?). For something in a regular pan that is too wet to be considered to saute then I would usually consider a faster pace.
So, the answer would be depends, depends, depends. Depends on what, in what, and with what.
Next up: best way to set the dial on an oven!