Hi,
If you choose to create the package without referencing the data, the data will be included in the package. The RuntimeLocalServer then unpacks that, by default to "C:\Users\<USER>\AppData\Local\ArcGISRuntime\Documents\ArcGIS\Packages". You can override this location by setting the ArcGISRuntime.AppDataPath property before calling ArcGISRuntime.Initialize: http://resources.arcgis.com/en/help/runtime-wpf/apiref/index.html?ESRI.ArcGIS.Client~ESRI.ArcGIS.Cli.... Note when MPKs are unpacked they have a GUID appended to the name to create a unique location e.g. "<MyMapName>_6BB729D1-E982-47F4-950A-DE9A96F90305".
If you would like to move the data to other devices, you are recommended to use the reference data option when creating your map packages. Relative paths are not supported within the package, therefore the path on each deployment machine will need to match the original path in order to successfully use that geodatabase with the map package. This is easily achieved by creating a virtual/mapped drive - for example by calling the "subst" dos command from code, or another programmatic solution is discussed here: http://stackoverflow.com/questions/3753758/creating-virtual-hard-drive.
Cheers
Mike