Drupal Commerce or Commerce Kickstart?

The recommended way to most quickly get answers for module-specific or theme-specific questions at drupal.org is within the 'Issues' pages for that specific project.

See...
Get the Fastest Answers to Module-Specific or Theme-Specific Issues at Drupal.org - How to
http://drupal.org/node/1478010

The module files are in profiles/commerce_kickstart/modules because that's where installation profiles store their modules. Drupal looks for modules in multiple places.
You can usually move them even after installing, but Drupal looks for them where they were last installed (registry), so if you move them you may receive errors. http://drupal.org/project/registry_rebuild can help.

If you don't use an installation profile, sites/all/modules is the typical location, or some prefer sites/all/modules/contrib and sites/all/modules/custom, for downloaded contrib and custom made modules respectively.

Regarding Commerce or Commerce Kickstart, if you don't use Kickstart you'll have to manually create more fields and references, etc. that the installation profile would otherwise have created for you. So it depends on your needs and whether you're comfortable configuring it all manually.

this pretty much is a valid question. And... I'm not quite sure it's in the right place but it's a good question.

I do know there are specific Drupal Group sites that might be more appropriate to ask this question... but --
probably one for ecommerce.
Of course there is the Commerce site. And yes. The Commerce issues section - but that's not the right place for it.

Anyway -

First of all Kickstart is a Profile. Simple as that. Think of it as a [Preconfigured Install Package.]
For other examples you can visit the profiles section on Drupal.org, google it, check out Acquia or any other example Profile Install.
That's why it installs under Profiles and is configured this way.
Why? Because thats the way Drupal works with Profiles.

Is this a good thing? Yes and No.
But what you should know is Drupal looks for Modules, Templates, Profiles, etc in an order.

Can their be conflicts sometimes yes if you install in both places. sites/all and profiles/modules etc? yes sometimes.
Will you have problems if you just move it to sites all? yes.
There is a way to change the settings/code for it to read off of the other path. Yes. or just look for moving/changing profile paths modules etc to sites/all -- but be careful Kickstart/Commerce is very intensive -- maybe someone can chime in on that.

Now. The ORIGINAL question was Commerce vs. Kickstart. It's a valid one. The same answer is Yes, if you want to save time and headache Install Kickstart. Is Kickstart good? Yes. They did an excellent job of putting together an awesome Profile Install.
Does it work? Yes.

Does Commerce work. Yes. It also is awesome. But it's pretty much - for the most part a good stripped down version of the cart.
So IF you understand how it works from there you can just add CUSTOM what you want and ONLY that for a Specific Purpose.
If you do research or understand a bit, you will learn - plus SIMPLE & stupid is best.

Only thing is that both and especially Kickstart is Very DB intensive. Meaning the DB is PRETTY large to start off out the gate.
Does Kickstart make it easier for you to get up and running, adding appropriate Views and Fields you most likely would need for a cart - YES. It certainly does.

My suggestion is get some space and install or play around with both. But Kickstart is worth an install to see how views and modules are configured to complete a nice Commerce cart Round Up.

You can still do most of this with Commerce but to get ALL of the functionality it will take you a while. But chances are you may not Need All the functionality.

Don't forget you can Turn things off for example modules or Add modules to complete your needs.

Plus you can move your profile templates modules etc but you better do it right otherwise you'll bust your site.

Also, don't forget the More you Install - modules even themes etc pretty much [everything] / The more you will inject your DB with tables etc and add more.

If you are doing a Production Site you will want to make your site as CLEAN as possible. Not just WORK. That's hopefully what people are paying you for.

Another question, and I pretty much already know the answer is - Can you just use Parts of Kickstart to add just the functionality you need to get what you need for its purpose? There are certainly some outstanding elements in Kickstart that Kickbutt.

Try to take a look at both and see how they are put together.

Bottom-line is: What exactly is it that you are trying to build and What is the end purpose / goal of the site/cart?

But if you have never checked out Commerce - you might want to check out Kickstart as it gives you insight to so much configuring pre-built for you. There is plenty to try to "take in" as Commerce is -- truly like drupal. Very powerful, advanced, flexible, and there is so much it can do.

* One other little sidenote: when you install Kickstart it does it step by step / towards the end it asks you to Install Demo Store which will install everything. If you check NO > it will allow you to individually check what you would like to add and what you would NOT.
But for your first install to get an idea of how it all works I suggest you install Demo Store. Once you figure it out more you can decide what is required to complete your project.