Do you know, it's just clicked. A form application is an executable and would be a totally stupid idea.
The .NET labs I did a while ago, but when I wasn't so comfortable with C# language. Definitely something I will re-visit.
Thanks for your comments.
The confusion will disappear over time with experience.
A "Form application" is an executable.
A "Classlibrary" is a DLL, which is what All AutoCAD managed
extensions are.
The confusion you're having is that you are assuming that
you must use a FormsApplication to use a form, which is not
the case. You can create forms in any managed project
whether it is an executable or a DLL.
Just start with the Wizard and create a standard ClassLibrary
project, then add references to acdbmdg.dll and admgd.dll,
along with references to System.Windows.Forms and to
System.Drawing (the latter two are needed to create and use
forms).
Then, from the solution explorer, right click on your project
and choose Add New Item, and in the dialog select a form.
If you've been studying C# and the AutoCAD api, then you
should already be familiar with building a basic AutoCAD
extension dll, with an IExtensionApplication, and one or more
commands.