Could someone please explain what this readme means?

"This is a patch for Streamline 3.1 which MUST be installed first. Note that when installing in Bain, this patch package must have HIGHER load order than Streamline 3.1."

The patch package is only Streamline 3.1.esp, so within the install order it gets overwritten by the unpatched Streamline 3.1.esp and what is the point of that?

I don't understand, it can't refer to the load order since there can only be one Streamline 3.1.esp

I think I must be wrong in some way since I am just learning.

Correct me if I'm wrong but I thought Streamline was for Oblivion only. This is the Morrowind mods section .

Yep. Oblivion. Install 3.1 first then the patch. If you're using BAIN (and you should be) make sure "Streamline_31_BAIN-22170.7z" is before "Streamline_31_Patch_Bain-22170.7z" in your install order.

Suggest you use the Report button and ask for this thread to moved to the Oblivion mods forum or locked (if I've helped enough). Use the button to the left.