It's a bit more than just moving from an add-on to an application. Both of them "supplement or enhance functionality" on top of JIRA Core.
The main difference as far as the end users are concerned is the licence model. You're probably familiar with the licensing of add-ons for JIRA 6 and below - they have to match numbers. So a 250 user JIRA means you need a 250 user licence for each add-on.
Applications are licensed separately. So you could have 100 Core users and 50 Software users, adding up to a total of 150 users. All users get to use all the functions in Core, but only the 50 Software users can use Scrum/Kanban boards.
Add-ons remain locked to the number of core users, but only for the largest application. In the 100/50 scenario I just gave, the largest licence is 100, so you only need add-on licences for 100.
When you install JIRA you have 3 applications: JIRA Core , JIRA Software and Service Desk.
If you want to work on SD you have to install it from the application tab in Application.
An add-on is an installable component that supplements or enhances the functionality of JIRA in some way.
Hope it helps
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