In Cubase there are a few different types of plugins.
VST-MA - These are MIDI processing plugins. Cubase comes with several, and you find and use them in the Track Inspector of MIDI or Instrument tracks in the form of MIDI Modifiers or Effects.
A small hand-full of third party VST-MA plugins exist that are compatible with Cubase. The only ones I personally am aware of that are still easy to acquire are Frank’s MIDI Plugins.
VST Effects - This type of plugin can be loaded into Effect slots in the Cubase Mixing console. Cubase ships with a wide variety of effect plugins (only work in Cubase), and you can also use third party effect plugins. Examples are things like Reverbs, Compressor/Limiters, Equalizers, Chorus Effects, Dithering routines, Spectral Analyzers, Saturation, Notch Filters, and a whole lot more.
VST Instruments - Instrument plugins can be loaded in a special rack mode to be played by MIDI tracks, or they can be loaded as individual Instrument Tracks (Again they will show up in the Instrument Rack). Examples of such plugins included with Cubase are HALion, REtrologue, Padshop, and Groove Agent. A very broad range of instrument plugins are out there…both free and commercial. They can be synthesizers, samplers, percussion kits, and more.
For instruments and effects, Cubase 12 supports VST2, and VST3 plugins (VST2 requires Rosetta on Newer Macs with ARM/Apple processors).
From Cubase 12 forward, it is strongly recommended you use VST3. Avoid VST2 unless your plugin doesn’t have a VST3 version, or for some reason the VST2 version performs better for your needs/system. Steinberg plans to discontinue VST2 support in future versions of Cubase.
Sound Libraries - These are actual sounds/programs/patches that you might load into a given Instrument Plugin. In general, different library developers will target a given player/instrument that they design sounds for. Quite a few of them have their very own players/plugins. For Example: HALion, that ships with Cubase comes with an assortment of ‘sound libraries’. For starters, you get HALion Sonic SE Basic, which is a fundamental set of sounds that adhere to the General MIDI I standards. You also get HALion libraries like Artist, Pro, and Hybrid depending on your version of Cubase. Additional libraries come with Artist for HALion that are optional to install (Verve or example). Groove Agent also has ‘libraries’ that come with Cubase. Extra libraries specifically for HALion and Groove Agent can purchased from Steinberg, as well as from 3rd parties.
Numerous third party Libraries exist for numerous Instrument Plugins! Most sound libraries these days require their own special proprietary plugin/player. For example, if you were to purchase East West’s Hollywood Choirs, then part of your purchase would include a the EW Play or EW Opus plugins to host it. Native Instrument libraries would use the free Kontakt player. Vienna Ensemble uses its own player, and so forth…
If you’re new to this stuff, and unless you’ve got a small boot drive, I’d recommend simply installing Cubase Artist and all its components on the main System Drive. It’d not very difficult to move the ‘sounds’ to a new location later using the Steinberg Library Manager.
The content that ships with Cubase Artist is pretty modest in size.
As for your larger third party sounds? Use your best judgement. Unless you are out of space on the System Drive, or plan to have HUNDREDS of tracks accessing the content at once…having it all one drive should be fine. If you invest in some huge Symphonic Orchestra library with several gigabyte of samples or something, it might well warrant installing on a second drive, but really, it’s up to you.
As a Beginner/Novice on Cubase Artist…I’m thinking you should be fine for a while yet just keeping it simple, and having it all go on the System Drive.
For VST3, The plugin wrappers themselves are usually kept on the system drive, but most plugins will have options in their installers to put resources and content in any partitions/directories you like.
I.E. On a Windows system…the VST3 plugin wrapper should always go in:
%SYSTEMDRIVE%\Program Files\Common Files\VST3
Other than that, it’s up to you, and the installers of your plugins to decide where everything else lives.
VST2 plugins are a bit different. There was no ‘standard’ saying the wrappers ‘must’ live in a given directory. In this case, put them anywhere you like, and you give your HOST (Cubase) a list of any and all directories that you like to keep VST2 wrappers. While there’s no ‘forced standard’ for VST2…most installers tend to steer you towards one of the following directories:
%SYSTEMDRIVE%\Program Files\Common Files\VST2
When you launch the Steinberg Download center, get your access codes and all in, etc…you’ll be able to find the download section for Cubase Artist.
Just grab it all and let it install to the default location. The descriptions are pretty straight forward on if it is a library for HALion, Groove Agent, or simply samples/loops/etc for Cubase itself.
Later, you can use the Steinberg Library Manager to relocate, or even remove things as you desire.
Really, for a first install of Cubase Artist…it’s not something to worry too much about.