This is taken from the man page of dpkg
Get list of package selections, and write it to stdout. Without a pattern, non-
installed packages (i.e. those which have been previously purged) will not be
:~$ dpkg -l aptitude
|/ Err?=(none)/Reinst-required (Status,Err: uppercase=bad)
||/ Name Version Architecture Description
ii aptitude 0.6.10-1 amd64 terminal-based package manager
where the "ii" at the beginning of the final line means it's installed.
The entry for aptitude
in the pkg-list created per your command yields this:
We can conclude that "install" in the pkg-list means alrealy installed
. I'm not clear why you find the output of dpkg -l xterm confusing.