If you pass both, PREFIX will be used to generate PATH and MANPATH, while the LIB you passed in will be used as is.
And I'm relucant to say 'best practice', as what's best in each situation varies greatly. Specifying both should get the .pm files installed to the correct place, but I can't be sure that your man pages or executables will be.
And to respond to your other question --
'vendor' == Vendors of operating systems that supply already compiled versions of perl.
As for examples, the link I gave (which was labeled 'special', and could have been labeled better), is a talk by Michael Schwern titled 'Why PREFIX Will Never Work'. Slide 8 talks about Apple's values in MacOSX, and slide 9 talks about the values in Debian.
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