@@ -10,7 +10,7 @@ squad plugin enable my-plugin
 squad plugin refresh my-plugin
 ```
 
-After that, spawned agents can receive the plugin's enabled context. For a knowledge plugin such as Graphify, refresh can generate approved artifacts under `.squad/knowledge/graphify/` so agents have a relationship map across code, docs, and decisions.
+After that, the plugin's static files are installed under `.squad/` and its roles are active. Agents spawned through the SDK's `AgentLifecycleManager` receive the enabled plugin context automatically. Agents spawned by the Squad coordinator (in GitHub Copilot or another supported host) or by the Squad interactive shell (`squad` with no arguments) do not yet; see [Runtime behavior](#runtime-behavior). For a knowledge plugin such as Graphify, refresh can generate approved artifacts under `.squad/knowledge/graphify/` that give agents a relationship map across code, docs, and decisions when they read them.
 
 The MVP is declarative-first with a narrow governed runtime for Squad-owned built-in providers. Squad records hook, adapter, and provider metadata, and approved providers can generate static artifacts. It does not execute plugin-supplied code.
 
@@ -158,19 +158,32 @@ Squad validates and records these dependencies so users know what Copilot plugin
 
 External integration metadata is also record-only. Fields such as `repository`, `upstream.installCommand`, and `mcp.installCommand` explain how a human can install external tools separately; Squad never runs those commands.
 
-Provider contracts are the typed extension seam for memory and knowledge systems. A contract declares the provider `type` (`memory`, `knowledge`, `persistence`, `event`, or `policy`), access `mode` (`read`, `write`, or `read-write`), `protocol` (`static-artifact` or `mcp`), optional static artifact binding, optional MCP binding metadata, and capability labels. These fields let spawned agents understand that a plugin represents a memory or knowledge provider without letting the plugin run code. During the MVP, provider contracts are prompt metadata only: Squad does not start MCP servers, call provider tools, query live memory backends, or install provider packages.
+Provider contracts are the typed extension seam for memory and knowledge systems. A contract declares the provider `type` (`memory`, `knowledge`, `persistence`, `event`, or `policy`), access `mode` (`read`, `write`, or `read-write`), `protocol` (`static-artifact` or `mcp`), optional static artifact binding, optional MCP binding metadata, and capability labels. These fields describe a memory or knowledge provider to agents, on spawn paths that inject plugin context, without letting the plugin run code. During the MVP, provider contracts are prompt metadata only: Squad does not start MCP servers, call provider tools, query live memory backends, register a Squad memory provider, or install provider packages.
 
 ---
 
 ## Runtime behavior
 
-Enabled plugins affect spawned Squad agents through their installed static artifacts and provider contracts. When an agent session is spawned, Squad reads `.squad/plugins/runtime.json`, finds enabled active plugin roles, and injects the installed guidance/metadata files plus provider contract summaries into the agent system context under a `Plugin Context` section.
+Enabled plugins can affect spawned agents through their installed static artifacts and provider contracts, but only on spawn paths that inject plugin context. On those paths, Squad reads `.squad/plugins/runtime.json`, finds enabled active plugin roles, and appends the installed guidance/metadata files plus provider contract summaries to the agent system prompt under a `Plugin Context` section.
 
-This is still declarative-first behavior: Squad consumes copied Markdown/metadata from `.squad/`, but it does not install upstream packages, start MCP servers, execute plugin-supplied commands, call provider tools, or query external tools during plugin install or agent spawn.
+Today only one spawn path does this:
+
+| How the agent is spawned | Plugin context injected? |
+| --- | --- |
+| Your own code calls the SDK's `AgentLifecycleManager.spawnAgent()` | Yes |
+| Your own code uses another SDK spawn helper, such as `spawnParallel` or `SquadCoordinator` | No. These helpers do not read plugin state. |
+| The Squad coordinator (`squad.agent.md`) in GitHub Copilot CLI, VS Code, or another supported host | No. The coordinator's spawn prompt does not read plugin state or plugin artifacts. |
+| The Squad interactive shell (`squad` with no arguments) | No. Agent sessions receive the charter only. |
+| `squad watch` | No. It runs `copilot -p` with a prompt built from Ralph's charter and the issue instructions. |
+| `squad loop` | No. It runs `copilot -p` with the prompt in your `loop.md`. |
+
+On the paths marked No, installed plugin files still sit under `.squad/`, but agents only see them if something points them there. For example, name the file in your request, or add a line such as "Read `.squad/knowledge/graphify/graphify-integration.md` before code relationship work" to the relevant agent charter or skill.
+
+Where plugin context is injected, it is still declarative-first behavior: Squad consumes copied Markdown/metadata from `.squad/`, but it does not install upstream packages, start MCP servers, execute plugin-supplied commands, call provider tools, or query external tools during plugin install or agent spawn.
 
 The MVP also includes a narrow governed runtime for Squad-owned built-in providers. `squad plugin refresh <plugin-id>` and `squad plugin run-lifecycle <plugin-id> <event>` can generate artifacts only when the provider name, lifecycle event, and output paths are allowlisted by Squad. The current approved provider is Graphify, which can refresh deterministic knowledge artifacts under `.squad/knowledge/graphify/`.
 
-Disabled plugins do not contribute prompt context, even if their files remain installed on disk.
+Disabled plugins do not contribute to the `Plugin Context` section, even if their files remain installed on disk.
 
 ---
 
@@ -184,7 +197,7 @@ The repository includes local sample plugins that exercise external integration
 | `samples/plugin-knowledge-index-server` | Instruction and knowledge MCP profile for the real `jagilber-org/index-server` project and npm package `@jagilber-org/index-server`. It declares a metadata-only `knowledge` provider contract for the Index Server MCP catalog. |
 | `samples/plugin-memory-mempalace` | Memory-palace-style provider profile for the real `MemPalace/mempalace` CLI and optional `mempalace-mcp` server. It declares a metadata-only `memory` provider contract for spatial memory. |
 
-Graphify's Copilot support is a separately installed skill/integration, not a Squad memory provider or a Squad-managed Copilot plugin. Index Server is an MCP-governed instruction/knowledge catalog, not a memory provider, although it is adjacent because agents can persist validated knowledge across sessions and repositories. MemPalace is a real memory system, but Squad still does not install its package, start MCP, or configure assistant hooks.
+Graphify's Copilot support is a separately installed skill/integration, not a Squad memory provider or a Squad-managed Copilot plugin. Index Server is an MCP-governed instruction/knowledge catalog, not a memory provider, although it is adjacent because agents can persist validated knowledge across sessions and repositories. MemPalace is a real memory system, but Squad still does not install its package, start MCP, or configure assistant hooks. Installing the MemPalace sample does not give agents a memory: it adds no tools, is not wired into `squad memory` or the `memory.*` tools, and does not change your MCP configuration. To let agents use MemPalace, install it and add `mempalace-mcp` to your assistant's MCP configuration yourself.
 
 ---
 
 
@@ -154,7 +154,7 @@ squad plugin enable my-extension
 
 **Step 8: Test locally**
 
-Run `squad plugin verify`, then run `squad plugin refresh <plugin-id>` if your plugin declares an approved built-in provider. Load your Squad session and verify the installed Squad knowledge, workflows, and generated artifacts appear and work as expected. If you declared Copilot dependencies, verify those are installed separately through Copilot.
+Run `squad plugin verify`, then run `squad plugin refresh <plugin-id>` if your plugin declares an approved built-in provider. Run `squad plugin list --json` to confirm the plugin is enabled and its files are installed under `.squad/`. Agents spawned by the Squad coordinator in GitHub Copilot, or by the Squad interactive shell (`squad` with no arguments), do not read plugin files automatically yet, so to check behavior in a session, point an agent at an installed file or reference it from a charter or skill (see [Runtime behavior](../features/plugins.md#runtime-behavior)). If you declared Copilot dependencies, verify those are installed separately through Copilot.
 
 ---
 
 
@@ -6,7 +6,7 @@ The plugin MVP is designed for reusable Squad knowledge and configuration, not e
 
 Copilot plugin dependencies can be declared with `copilot.requires`. They are metadata only: Squad records and displays them so users know which Copilot plugins to install through Copilot's own lifecycle.
 
-External packages, repositories, and MCP servers can be described with `repository`, `upstream`, and `mcp`. Typed provider contracts can be described with `providers`. They are also metadata only: Squad may display install hints and inject provider summaries into spawned-agent context, but it must not run package managers, start MCP servers, configure assistant clients, call provider tools, query live provider backends, or install assistant hooks.
+External packages, repositories, and MCP servers can be described with `repository`, `upstream`, and `mcp`. Typed provider contracts can be described with `providers`. They are also metadata only: Squad may display install hints and, on spawn paths that inject plugin context (today only the SDK's `AgentLifecycleManager`), add provider summaries to spawned-agent context, but it must not run package managers, start MCP servers, configure assistant clients, call provider tools, query live provider backends, or install assistant hooks.
 
 ---
 
 
@@ -25,6 +25,8 @@ squad plugin list --json
 
 This example is declarative only. Squad does not install `mempalace`, run `mempalace`, start `mempalace-mcp`, install assistant hooks, or execute memory provider code during plugin install.
 
+Installing this sample does not give agents a memory. It copies one guidance file to `.squad/memory/providers/mempalace-provider.md` and records metadata under `.squad/plugins/`. Agents spawned by the Squad coordinator in GitHub Copilot, or by the Squad interactive shell (`squad` with no arguments), do not see that file unless you point them at it. Only SDK code that spawns agents through `AgentLifecycleManager` adds it to the agent prompt automatically.
+
 Install and configure MemPalace separately:
 
 ```bash