Select component or substrate to match your data sheet. Typically, Component is for a BGA that mounts to a PCB. substrate is for flip-chip (think 3D die).
The oversize/undersize for the soldermask is for how the pad gets defined. Some BGAs require larger pads and the soldermask defines the area that the ball will flow over. Others have exposed PCB with no mask around the pad.
Paste mask typically gets undersized as you don't need a blob of solder paste as large as your pad. Consult with your assembly house for recommendations; they typically tweak the paste mask to their process.
I am a bit confused now. Can you explain the difference between BGA and Flip-chip package. I was thinking they are the same thing.
So if i have a BGA chip then i should use 'component' and if i have chip on board (PADS up) the i should use 'substrate'. Right?