diff --git a/fabric-item-api-v1/src/client/java/net/fabricmc/fabric/mixin/item/client/HeldItemRendererMixin.java b/fabric-item-api-v1/src/client/java/net/fabricmc/fabric/mixin/item/client/HeldItemRendererMixin.java
index 3f10a0e211..a6153406f6 100644
--- a/fabric-item-api-v1/src/client/java/net/fabricmc/fabric/mixin/item/client/HeldItemRendererMixin.java
+++ b/fabric-item-api-v1/src/client/java/net/fabricmc/fabric/mixin/item/client/HeldItemRendererMixin.java
@@ -31,7 +31,7 @@
 import net.fabricmc.fabric.api.item.v1.FabricItem;
 
 /**
- * Allow canceling the held item update animation if {@link FabricItem#allowNbtUpdateAnimation} returns false.
+ * Allow canceling the held item update animation if {@link FabricItem#allowComponentsUpdateAnimation} returns false.
  */
 @Mixin(HeldItemRenderer.class)
 public class HeldItemRendererMixin {
@@ -51,7 +51,7 @@ private void modifyProgressAnimation(CallbackInfo ci) {
 		ItemStack newMainStack = client.player.getMainHandStack();
 
 		if (mainHand.getItem() == newMainStack.getItem()) {
-			if (!mainHand.getItem().allowNbtUpdateAnimation(client.player, Hand.MAIN_HAND, mainHand, newMainStack)) {
+			if (!mainHand.getItem().allowComponentsUpdateAnimation(client.player, Hand.MAIN_HAND, mainHand, newMainStack)) {
 				mainHand = newMainStack;
 			}
 		}
@@ -60,7 +60,7 @@ private void modifyProgressAnimation(CallbackInfo ci) {
 		ItemStack newOffStack = client.player.getOffHandStack();
 
 		if (offHand.getItem() == newOffStack.getItem()) {
-			if (!offHand.getItem().allowNbtUpdateAnimation(client.player, Hand.OFF_HAND, offHand, newOffStack)) {
+			if (!offHand.getItem().allowComponentsUpdateAnimation(client.player, Hand.OFF_HAND, offHand, newOffStack)) {
 				offHand = newOffStack;
 			}
 		}
diff --git a/fabric-item-api-v1/src/main/java/net/fabricmc/fabric/api/item/v1/FabricItem.java b/fabric-item-api-v1/src/main/java/net/fabricmc/fabric/api/item/v1/FabricItem.java
index 750c68003c..6cdc69de7d 100644
--- a/fabric-item-api-v1/src/main/java/net/fabricmc/fabric/api/item/v1/FabricItem.java
+++ b/fabric-item-api-v1/src/main/java/net/fabricmc/fabric/api/item/v1/FabricItem.java
@@ -42,8 +42,8 @@
  */
 public interface FabricItem {
 	/**
-	 * When the NBT of an item stack in the main hand or off hand changes, vanilla runs an "update animation".
-	 * This function is called on the client side when the NBT or count of the stack has changed, but not the item,
+	 * When the components of an item stack in the main hand or off hand changes, vanilla runs an "update animation".
+	 * This function is called on the client side when the components or count of the stack has changed, but not the item,
 	 * and returning false cancels this animation.
 	 *
 	 * @param player   the current player; this may be safely cast to {@link net.minecraft.client.network.ClientPlayerEntity} in client-only code
@@ -52,13 +52,13 @@ public interface FabricItem {
 	 * @param newStack the new stack, also of this item
 	 * @return true to run the vanilla animation, false to cancel it.
 	 */
-	default boolean allowNbtUpdateAnimation(PlayerEntity player, Hand hand, ItemStack oldStack, ItemStack newStack) {
+	default boolean allowComponentsUpdateAnimation(PlayerEntity player, Hand hand, ItemStack oldStack, ItemStack newStack) {
 		return true;
 	}
 
 	/**
-	 * When the NBT of the selected stack changes, block breaking progress is reset.
-	 * This function is called when the NBT of the selected stack has changed,
+	 * When the components of the selected stack changes, block breaking progress is reset.
+	 * This function is called when the components of the selected stack has changed,
 	 * and returning true allows the block breaking progress to continue.
 	 *
 	 * @param player   the player breaking the block
diff --git a/fabric-item-api-v1/src/testmod/java/net/fabricmc/fabric/test/item/UpdatingItem.java b/fabric-item-api-v1/src/testmod/java/net/fabricmc/fabric/test/item/UpdatingItem.java
index 54f4fe6e0e..e5683f656f 100644
--- a/fabric-item-api-v1/src/testmod/java/net/fabricmc/fabric/test/item/UpdatingItem.java
+++ b/fabric-item-api-v1/src/testmod/java/net/fabricmc/fabric/test/item/UpdatingItem.java
@@ -51,7 +51,7 @@ public void inventoryTick(ItemStack stack, World world, Entity entity, int slot,
 	}
 
 	@Override
-	public boolean allowNbtUpdateAnimation(PlayerEntity player, Hand hand, ItemStack originalStack, ItemStack updatedStack) {
+	public boolean allowComponentsUpdateAnimation(PlayerEntity player, Hand hand, ItemStack originalStack, ItemStack updatedStack) {
 		return allowUpdateAnimation;
 	}
 
diff --git a/fabric-transfer-api-v1/README.md b/fabric-transfer-api-v1/README.md
index 0dd515eded..42186b22ca 100644
--- a/fabric-transfer-api-v1/README.md
+++ b/fabric-transfer-api-v1/README.md
@@ -23,7 +23,7 @@ and combine them with `CombinedStorage`.
 
 ## Fluid transfer
 A `Storage<FluidVariant>` is any object that can store fluids. It is just a `Storage<T>`, where `T` is
-[`FluidVariant`](src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/FluidVariant.java), the immutable combination of a `Fluid` and additional NBT data.
+[`FluidVariant`](src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/FluidVariant.java), the immutable combination of a `Fluid` and additional components.
 Instances can be accessed through the API lookups defined in [`FluidStorage`](src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/FluidStorage.java).
 
 The unit for fluid transfer is 1/81000ths of a bucket, also known as _droplets_.
@@ -31,8 +31,8 @@ The unit for fluid transfer is 1/81000ths of a bucket, also known as _droplets_.
 to work with droplets.
 
 Client-side [Fluid variant rendering](src/main/java/net/fabricmc/fabric/api/transfer/v1/client/fluid/FluidVariantRendering.java) will use regular fluid rendering by default,
-ignoring the additional NBT data.
-`Fluid`s that wish to render differently depending on the stored NBT data can register a
+ignoring the additional components.
+`Fluid`s that wish to render differently depending on the stored components can register a
 [`FluidVariantRenderHandler`](src/main/java/net/fabricmc/fabric/api/transfer/v1/client/fluid/FluidVariantRenderHandler.java).
 
 ## Item transfer
diff --git a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/CauldronFluidContent.java b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/CauldronFluidContent.java
index 157eee86ef..342a37b363 100644
--- a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/CauldronFluidContent.java
+++ b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/CauldronFluidContent.java
@@ -39,7 +39,7 @@
  * <p>The {@code CauldronFluidContent} itself defines:
  * <ul>
  *     <li>The block of the cauldron.</li>
- *     <li>The fluid that can be accepted by the cauldron. NBT is discarded when entering the cauldron.</li>
+ *     <li>The fluid that can be accepted by the cauldron. Components are discarded when entering the cauldron.</li>
  *     <li>Which fluid amounts can be stored in the cauldron, and how they map to the level property of the cauldron.
  *     If {@code levelProperty} is {@code null}, then {@code maxLevel = 1}, and there is only one level.
  *     Otherwise, the levels are all the integer values between {@code 1} and {@code maxLevel} (included).
diff --git a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/base/EmptyItemFluidStorage.java b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/base/EmptyItemFluidStorage.java
index 741791aeae..073aa8800c 100644
--- a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/base/EmptyItemFluidStorage.java
+++ b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/base/EmptyItemFluidStorage.java
@@ -35,7 +35,7 @@
 /**
  * Base implementation of a fluid storage for an empty item.
  * The empty item can be filled with an exact amount of some fluid to yield a full item instead.
- * The default behavior is to copy the NBT from the empty item to the full item,
+ * The default behavior is to copy the components from the empty item to the full item,
  * however there is a second constructor that allows customizing the mapping.
  *
  * <p>For example, an empty bucket could be registered to accept exactly 81000 droplets of water and turn into a water bucket, like that:
@@ -67,7 +67,7 @@ public final class EmptyItemFluidStorage implements InsertionOnlyStorage<FluidVa
 	 *
 	 * @param context The current context.
 	 * @param fullItem The new item after a successful fill operation.
-	 * @param insertableFluid The fluid that can be inserted. Fluid variant NBT is ignored.
+	 * @param insertableFluid The fluid that can be inserted. Fluid variant components are ignored.
 	 * @param insertableAmount The amount of fluid that can be inserted.
 	 */
 	public EmptyItemFluidStorage(ContainerItemContext context, Item fullItem, Fluid insertableFluid, long insertableAmount) {
@@ -76,12 +76,12 @@ public EmptyItemFluidStorage(ContainerItemContext context, Item fullItem, Fluid
 
 	/**
 	 * Create a new instance, with a custom mapping function.
-	 * The mapping function allows customizing how the NBT of the full item depends on the NBT of the empty item.
-	 * The default behavior with the other constructor is to just copy the full NBT.
+	 * The mapping function allows customizing how the components of the full item depends on the components of the empty item.
+	 * The default behavior with the other constructor is to just copy the full components.
 	 *
 	 * @param context The current context.
 	 * @param emptyToFullMapping A function mapping the empty item variant, to the variant that should be used for the full item.
-	 * @param insertableFluid The fluid that can be inserted. Fluid variant NBT is ignored on insertion.
+	 * @param insertableFluid The fluid that can be inserted. Fluid variant components are ignored on insertion.
 	 * @param insertableAmount The amount of fluid that can be inserted.
 	 * @see #EmptyItemFluidStorage(ContainerItemContext, Item, Fluid, long)
 	 */
diff --git a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/base/FullItemFluidStorage.java b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/base/FullItemFluidStorage.java
index 4ec9db661a..6eecae261a 100644
--- a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/base/FullItemFluidStorage.java
+++ b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/fluid/base/FullItemFluidStorage.java
@@ -31,7 +31,7 @@
 /**
  * Base implementation of a fluid storage for a full item.
  * The full item contains some fixed amount of a fluid variant, which can be extracted entirely to yield an empty item.
- * The default behavior is to copy the NBT from the full item to the empty item,
+ * The default behavior is to copy the components from the full item to the empty item,
  * however there is a second constructor that allows customizing the mapping.
  *
  * <p>This is used similarly to {@link EmptyItemFluidStorage}.
@@ -57,8 +57,8 @@ public FullItemFluidStorage(ContainerItemContext context, Item emptyItem, FluidV
 
 	/**
 	 * Create a new instance, with a custom mapping function.
-	 * The mapping function allows customizing how the NBT of the empty item depends on the NBT of the full item.
-	 * The default behavior with the other constructor is to just copy the full NBT.
+	 * The mapping function allows customizing how the components of the empty item depends on the components of the full item.
+	 * The default behavior with the other constructor is to just copy the full components.
 	 *
 	 * @param context The current context.
 	 * @param fullToEmptyMapping A function mapping the full item variant, to the variant that should be used
diff --git a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/package-info.java b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/package-info.java
index 4a5d7a3eab..140274365b 100644
--- a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/package-info.java
+++ b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/package-info.java
@@ -45,7 +45,7 @@
  *
  * <p><h2>Fluid transfer</h2>
  * A {@code Storage<FluidVariant>} is any object that can store fluids. It is just a {@code Storage<T>}, where {@code T} is
- * {@link net.fabricmc.fabric.api.transfer.v1.fluid.FluidVariant FluidVariant}, the immutable combination of a {@code Fluid} and additional NBT data.
+ * {@link net.fabricmc.fabric.api.transfer.v1.fluid.FluidVariant FluidVariant}, the immutable combination of a {@code Fluid} and additional components.
  * Instances can be accessed through the API lookups defined in {@link net.fabricmc.fabric.api.transfer.v1.fluid.FluidStorage FluidStorage}.
  * </p>
  *
@@ -53,8 +53,8 @@
  * {@link net.fabricmc.fabric.api.transfer.v1.fluid.FluidConstants FluidConstants} contains a few helpful constants to work with droplets.
  *
  * <p>Client-side {@linkplain net.fabricmc.fabric.api.transfer.v1.client.fluid.FluidVariantRendering fluid variant rendering} will use regular fluid rendering by default,
- * ignoring the additional NBT data.
- * {@code Fluid}s that wish to render differently depending on the stored NBT data can register a
+ * ignoring the additional components.
+ * {@code Fluid}s that wish to render differently depending on the stored components can register a
  * {@link net.fabricmc.fabric.api.transfer.v1.client.fluid.FluidVariantRenderHandler FluidVariantRenderHandler}.
  *
  * <p><h2>Item transfer</h2>
diff --git a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/storage/TransferVariant.java b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/storage/TransferVariant.java
index a5f1c32814..2ce9cd7839 100644
--- a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/storage/TransferVariant.java
+++ b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/storage/TransferVariant.java
@@ -27,7 +27,7 @@
  * but note that a {@link Storage} is not necessarily bound to {@code TransferVariant}. Its generic parameter can be any immutable object.
  *
  * <p><b>Transfer variants must always be compared with {@code equals}, never by reference!</b>
- * {@code hashCode} is guaranteed to be correct and constant time independently of the size of the NBT.
+ * {@code hashCode} is guaranteed to be correct and constant time independently of the size of the components.
  *
  * @param <O> The type of the immutable object instance, for example {@code Item} or {@code Fluid}.
  */
diff --git a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/storage/base/SingleVariantItemStorage.java b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/storage/base/SingleVariantItemStorage.java
index 82199ddec5..06f88cec88 100644
--- a/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/storage/base/SingleVariantItemStorage.java
+++ b/fabric-transfer-api-v1/src/main/java/net/fabricmc/fabric/api/transfer/v1/storage/base/SingleVariantItemStorage.java
@@ -27,7 +27,7 @@
 
 /**
  * Base implementation of a fixed-capacity "continuous" storage for item-provided storage APIs.
- * The item may not change, so the data has to be stored in the NBT of the stacks.
+ * The item may not change, so the data has to be stored in the components of the stacks.
  * This can be used for example to implement portable fluid tanks, fluid-containing jetpacks, and so on...
  * Continuous here means that they can store any integer amount between 0 and the capacity, unlike buckets or bottles.
  *
@@ -35,11 +35,11 @@
  * <ul>
  *    <li>You must override {@link #getBlankResource()}, for example {@code return FluidVariant.blank();} for fluids.</li>
  *    <li>You must override {@link #getResource(ItemVariant)} and {@link #getAmount(ItemVariant)}.
- *    Generally you will read the resource and the amount from the NBT of the item variant.</li>
+ *    Generally you will read the resource and the amount from the components of the item variant.</li>
  *    <li>You must override {@link #getCapacity(TransferVariant)} to set the capacity of your storage.</li>
  *    <li>You must override {@link #getUpdatedVariant}. It is used to change the resource and the amount of the item variant.
- *    Generally you will copy the NBT, modify it, and then create a new variant from that.
- *    Copying the NBT instead of recreating it from scratch is important to keep custom names or enchantments.</li>
+ *    Generally you will copy the components, modify it, and then create a new variant from that.
+ *    Copying the components instead of recreating it from scratch is important to keep custom names or enchantments.</li>
  *    <li>You may also override {@link #canInsert} and {@link #canExtract} if you want to restrict insertion and/or extraction.</li>
  * </ul>
  *
@@ -66,12 +66,12 @@ public SingleVariantItemStorage(ContainerItemContext context) {
 	protected abstract T getBlankResource();
 
 	/**
-	 * Return the current resource by reading the NBT of the passed variant.
+	 * Return the current resource by reading the components of the passed variant.
 	 */
 	protected abstract T getResource(ItemVariant currentVariant);
 
 	/**
-	 * Return the current amount by reading the NBT of the passed variant.
+	 * Return the current amount by reading the components of the passed variant.
 	 */
 	protected abstract long getAmount(ItemVariant currentVariant);
 
@@ -84,11 +84,12 @@ public SingleVariantItemStorage(ContainerItemContext context) {
 	/**
 	 * Return an updated variant with new resource and amount.
 	 * Implementors should generally convert the passed {@code currentVariant} to a stack,
-	 * then edit the NBT of the stack so it contains the correct resource and amount.
+	 * then edit the components of the stack so it contains the correct resource and amount.
 	 *
-	 * <p>When the new amount is 0, it is recommended that the sub-NBTs corresponding to the resource and amount
-	 * be removed, for example using {@link ItemStack#removeSubNbt}, so that newly-crafted containers can stack with
-	 * emptied containers.
+	 * <p>When the new amount is 0, it is recommended that the components corresponding to the resource and amount
+	 * be removed, so that newly-crafted containers can stack with emptied containers.
+	 * If a custom item is used, this means {@linkplain ItemStack#set setting} it to the default as specified in {@link Item.Settings#component};
+	 * if a vanilla item is used, this means {@linkplain ItemStack#remove removing} the said component.
 	 *
 	 * @param currentVariant Variant to which the modification should be applied.
 	 * @param newResource Resource that should be contained in the returned variant.
diff --git a/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/FluidItemTests.java b/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/FluidItemTests.java
index 2a1d8bbe79..16d7c2fc0a 100644
--- a/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/FluidItemTests.java
+++ b/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/FluidItemTests.java
@@ -189,7 +189,7 @@ public void testSimpleContentsQuery() {
 				null,
 				StorageUtil.findExtractableContent(
 						ContainerItemContext.withConstant(new ItemStack(Items.WATER_BUCKET)).find(FluidStorage.ITEM),
-						FluidVariant::hasComponents, // Only allow NBT -> won't match anything.
+						FluidVariant::hasComponents, // Only allow components -> won't match anything.
 						null
 				)
 		);
diff --git a/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/ItemTests.java b/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/ItemTests.java
index a2e6f345a7..9cbb2e2b67 100644
--- a/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/ItemTests.java
+++ b/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/ItemTests.java
@@ -90,7 +90,7 @@ public void testStackReference() {
 
 		if (stack != inv.getStack(0)) throw new AssertionError("Stack should have stayed the same.");
 
-		// Also edit the stack when the item matches, even when the NBT and the count change.
+		// Also edit the stack when the item matches, even when the components and the count change.
 		ItemVariant oldVariant = ItemVariant.of(Items.DIAMOND);
 		ComponentChanges components = ComponentChanges.builder().add(ENERGY, 42).build();
 		ItemVariant newVariant = ItemVariant.of(Items.DIAMOND, components);
@@ -102,7 +102,7 @@ public void testStackReference() {
 		}
 
 		if (stack != inv.getStack(0)) throw new AssertionError("Stack should have stayed the same.");
-		if (!stackEquals(stack, newVariant, 5)) throw new AssertionError("Failed to update stack NBT or count.");
+		if (!stackEquals(stack, newVariant, 5)) throw new AssertionError("Failed to update stack components or count.");
 	}
 
 	@Test
diff --git a/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/SingleVariantItemStorageTests.java b/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/SingleVariantItemStorageTests.java
index 89b01a564f..00bad3546d 100644
--- a/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/SingleVariantItemStorageTests.java
+++ b/fabric-transfer-api-v1/src/test/java/net/fabricmc/fabric/test/transfer/unittests/SingleVariantItemStorageTests.java
@@ -97,7 +97,7 @@ public void testWaterTank() {
 			tx.commit();
 		}
 
-		// Make sure custom NBT is kept.
+		// Make sure other components are kept.
 		Text customName = Text.literal("Lava-containing diamond!");
 		inv.getStack(0).set(DataComponentTypes.CUSTOM_NAME, customName);
 
@@ -215,7 +215,9 @@ private static void setContents(ItemStack stack, FluidVariant newResource, long
 			FluidData fluidData = new FluidData(newResource, newAmount);
 			stack.set(FLUID, fluidData);
 		} else {
-			// Make sure emptied tanks can stack with tanks without NBT.
+			// Make sure emptied tanks can stack with tanks without components.
+			// Note: because we use a vanilla item (diamond), we need to remove;
+			// a custom item should instead set the fluid to the default value as specified in the item settings.
 			stack.remove(FLUID);
 		}
 	}
@@ -258,7 +260,7 @@ protected long getCapacity(FluidVariant variant) {
 
 			@Override
 			protected ItemVariant getUpdatedVariant(ItemVariant currentVariant, FluidVariant newResource, long newAmount) {
-				// Operate on the stack directly to keep any other NBT data such as a custom name or enchant.
+				// Operate on the stack directly to keep any other components such as a custom name or enchant.
 				ItemStack stack = currentVariant.toStack();
 				setContents(stack, newResource, newAmount);
 				return ItemVariant.of(stack);