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And if no namespace is provided (`key2` is absent, `key1` is `bar`), then the project name is the namespace.

Yep - that's exactly right.

In most examples we've removed that argument now, so in general you shouldn't have to think about this at all (unless you are building a library).

<https://github.com/pulumi/pulumi/issues/2166> may also further simplify this.