diff --git a/CHANGES.rst b/CHANGES.rst
index 68a8f793..3ce9699e 100644
--- a/CHANGES.rst
+++ b/CHANGES.rst
@@ -30,6 +30,8 @@ Unreleased
 -   Inline some optional imports that are only used for certain CLI
     commands. :pr:`4606`
 -   Relax type annotation for ``after_request`` functions. :issue:`4600`
+-   ``instance_path`` for namespace packages uses the path closest to
+    the imported submodule. :issue:`4600`
 
 
 Version 2.1.2
diff --git a/docs/testing.rst b/docs/testing.rst
index 6f9d6ee1..8545bd39 100644
--- a/docs/testing.rst
+++ b/docs/testing.rst
@@ -92,7 +92,7 @@ The ``client`` has methods that match the common HTTP request methods,
 such as ``client.get()`` and ``client.post()``. They take many arguments
 for building the request; you can find the full documentation in
 :class:`~werkzeug.test.EnvironBuilder`. Typically you'll use ``path``,
-``query``, ``headers``, and ``data`` or ``json``.
+``query_string``, ``headers``, and ``data`` or ``json``.
 
 To make a request, call the method the request should use with the path
 to the route to test. A :class:`~werkzeug.test.TestResponse` is returned
@@ -108,9 +108,9 @@ provides ``response.text``, or use ``response.get_data(as_text=True)``.
         assert b"<h2>Hello, World!</h2>" in response.data
 
 
-Pass a dict ``query={"key": "value", ...}`` to set arguments in the
-query string (after the ``?`` in the URL). Pass a dict ``headers={}``
-to set request headers.
+Pass a dict ``query_string={"key": "value", ...}`` to set arguments in
+the query string (after the ``?`` in the URL). Pass a dict
+``headers={}`` to set request headers.
 
 To send a request body in a POST or PUT request, pass a value to
 ``data``. If raw bytes are passed, that exact body is used. Usually,
diff --git a/setup.cfg b/setup.cfg
index 597eece1..e858d13a 100644
--- a/setup.cfg
+++ b/setup.cfg
@@ -87,7 +87,7 @@ per-file-ignores =
     src/flask/__init__.py: F401
 
 [mypy]
-files = src/flask
+files = src/flask, tests/typing
 python_version = 3.7
 show_error_codes = True
 allow_redefinition = True
diff --git a/src/flask/app.py b/src/flask/app.py
index ba2be6d2..93335029 100644
--- a/src/flask/app.py
+++ b/src/flask/app.py
@@ -1076,7 +1076,7 @@ class Flask(Scaffold):
         self,
         rule: str,
         endpoint: t.Optional[str] = None,
-        view_func: t.Optional[t.Callable] = None,
+        view_func: t.Optional[ft.ViewCallable] = None,
         provide_automatic_options: t.Optional[bool] = None,
         **options: t.Any,
     ) -> None:
@@ -1862,7 +1862,7 @@ class Flask(Scaffold):
                 if isinstance(rv[1], (Headers, dict, tuple, list)):
                     rv, headers = rv
                 else:
-                    rv, status = rv  # type: ignore[misc]
+                    rv, status = rv  # type: ignore[assignment,misc]
             # other sized tuples are not allowed
             else:
                 raise TypeError(
diff --git a/src/flask/blueprints.py b/src/flask/blueprints.py
index 1ea7d03e..7ed599a0 100644
--- a/src/flask/blueprints.py
+++ b/src/flask/blueprints.py
@@ -392,7 +392,7 @@ class Blueprint(Scaffold):
         self,
         rule: str,
         endpoint: t.Optional[str] = None,
-        view_func: t.Optional[t.Callable] = None,
+        view_func: t.Optional[ft.ViewCallable] = None,
         provide_automatic_options: t.Optional[bool] = None,
         **options: t.Any,
     ) -> None:
@@ -580,12 +580,14 @@ class Blueprint(Scaffold):
         return f
 
     @setupmethod
-    def app_errorhandler(self, code: t.Union[t.Type[Exception], int]) -> t.Callable:
+    def app_errorhandler(
+        self, code: t.Union[t.Type[Exception], int]
+    ) -> t.Callable[[ft.ErrorHandlerDecorator], ft.ErrorHandlerDecorator]:
         """Like :meth:`Flask.errorhandler` but for a blueprint.  This
         handler is used for all requests, even if outside of the blueprint.
         """
 
-        def decorator(f: ft.ErrorHandlerCallable) -> ft.ErrorHandlerCallable:
+        def decorator(f: ft.ErrorHandlerDecorator) -> ft.ErrorHandlerDecorator:
             self.record_once(lambda s: s.app.errorhandler(code)(f))
             return f
 
diff --git a/src/flask/scaffold.py b/src/flask/scaffold.py
index 56358aed..54d42d1d 100644
--- a/src/flask/scaffold.py
+++ b/src/flask/scaffold.py
@@ -1,5 +1,6 @@
 import importlib.util
 import os
+import pathlib
 import pkgutil
 import sys
 import typing as t
@@ -111,7 +112,7 @@ class Scaffold:
         self.view_functions: t.Dict[str, t.Callable] = {}
 
         #: A data structure of registered error handlers, in the format
-        #: ``{scope: {code: {class: handler}}}```. The ``scope`` key is
+        #: ``{scope: {code: {class: handler}}}``. The ``scope`` key is
         #: the name of a blueprint the handlers are active for, or
         #: ``None`` for all requests. The ``code`` key is the HTTP
         #: status code for ``HTTPException``, or ``None`` for
@@ -351,14 +352,16 @@ class Scaffold:
         method: str,
         rule: str,
         options: dict,
-    ) -> t.Callable[[F], F]:
+    ) -> t.Callable[[ft.RouteDecorator], ft.RouteDecorator]:
         if "methods" in options:
             raise TypeError("Use the 'route' decorator to use the 'methods' argument.")
 
         return self.route(rule, methods=[method], **options)
 
     @setupmethod
-    def get(self, rule: str, **options: t.Any) -> t.Callable[[F], F]:
+    def get(
+        self, rule: str, **options: t.Any
+    ) -> t.Callable[[ft.RouteDecorator], ft.RouteDecorator]:
         """Shortcut for :meth:`route` with ``methods=["GET"]``.
 
         .. versionadded:: 2.0
@@ -366,7 +369,9 @@ class Scaffold:
         return self._method_route("GET", rule, options)
 
     @setupmethod
-    def post(self, rule: str, **options: t.Any) -> t.Callable[[F], F]:
+    def post(
+        self, rule: str, **options: t.Any
+    ) -> t.Callable[[ft.RouteDecorator], ft.RouteDecorator]:
         """Shortcut for :meth:`route` with ``methods=["POST"]``.
 
         .. versionadded:: 2.0
@@ -374,7 +379,9 @@ class Scaffold:
         return self._method_route("POST", rule, options)
 
     @setupmethod
-    def put(self, rule: str, **options: t.Any) -> t.Callable[[F], F]:
+    def put(
+        self, rule: str, **options: t.Any
+    ) -> t.Callable[[ft.RouteDecorator], ft.RouteDecorator]:
         """Shortcut for :meth:`route` with ``methods=["PUT"]``.
 
         .. versionadded:: 2.0
@@ -382,7 +389,9 @@ class Scaffold:
         return self._method_route("PUT", rule, options)
 
     @setupmethod
-    def delete(self, rule: str, **options: t.Any) -> t.Callable[[F], F]:
+    def delete(
+        self, rule: str, **options: t.Any
+    ) -> t.Callable[[ft.RouteDecorator], ft.RouteDecorator]:
         """Shortcut for :meth:`route` with ``methods=["DELETE"]``.
 
         .. versionadded:: 2.0
@@ -390,7 +399,9 @@ class Scaffold:
         return self._method_route("DELETE", rule, options)
 
     @setupmethod
-    def patch(self, rule: str, **options: t.Any) -> t.Callable[[F], F]:
+    def patch(
+        self, rule: str, **options: t.Any
+    ) -> t.Callable[[ft.RouteDecorator], ft.RouteDecorator]:
         """Shortcut for :meth:`route` with ``methods=["PATCH"]``.
 
         .. versionadded:: 2.0
@@ -398,7 +409,9 @@ class Scaffold:
         return self._method_route("PATCH", rule, options)
 
     @setupmethod
-    def route(self, rule: str, **options: t.Any) -> t.Callable[[F], F]:
+    def route(
+        self, rule: str, **options: t.Any
+    ) -> t.Callable[[ft.RouteDecorator], ft.RouteDecorator]:
         """Decorate a view function to register it with the given URL
         rule and options. Calls :meth:`add_url_rule`, which has more
         details about the implementation.
@@ -422,7 +435,7 @@ class Scaffold:
             :class:`~werkzeug.routing.Rule` object.
         """
 
-        def decorator(f: F) -> F:
+        def decorator(f: ft.RouteDecorator) -> ft.RouteDecorator:
             endpoint = options.pop("endpoint", None)
             self.add_url_rule(rule, endpoint, f, **options)
             return f
@@ -434,7 +447,7 @@ class Scaffold:
         self,
         rule: str,
         endpoint: t.Optional[str] = None,
-        view_func: t.Optional[t.Callable] = None,
+        view_func: t.Optional[ft.ViewCallable] = None,
         provide_automatic_options: t.Optional[bool] = None,
         **options: t.Any,
     ) -> None:
@@ -637,7 +650,7 @@ class Scaffold:
     @setupmethod
     def errorhandler(
         self, code_or_exception: t.Union[t.Type[Exception], int]
-    ) -> t.Callable[[ft.ErrorHandlerCallable], ft.ErrorHandlerCallable]:
+    ) -> t.Callable[[ft.ErrorHandlerDecorator], ft.ErrorHandlerDecorator]:
         """Register a function to handle errors by code or exception class.
 
         A decorator that is used to register a function given an
@@ -667,7 +680,7 @@ class Scaffold:
                                   an arbitrary exception
         """
 
-        def decorator(f: ft.ErrorHandlerCallable) -> ft.ErrorHandlerCallable:
+        def decorator(f: ft.ErrorHandlerDecorator) -> ft.ErrorHandlerDecorator:
             self.register_error_handler(code_or_exception, f)
             return f
 
@@ -766,30 +779,55 @@ def _matching_loader_thinks_module_is_package(loader, mod_name):
     )
 
 
-def _find_package_path(root_mod_name):
-    """Find the path that contains the package or module."""
+def _path_is_relative_to(path: pathlib.PurePath, base: str) -> bool:
+    # Path.is_relative_to doesn't exist until Python 3.9
     try:
-        spec = importlib.util.find_spec(root_mod_name)
+        path.relative_to(base)
+        return True
+    except ValueError:
+        return False
 
-        if spec is None:
+
+def _find_package_path(import_name):
+    """Find the path that contains the package or module."""
+    root_mod_name, _, _ = import_name.partition(".")
+
+    try:
+        root_spec = importlib.util.find_spec(root_mod_name)
+
+        if root_spec is None:
             raise ValueError("not found")
     # ImportError: the machinery told us it does not exist
     # ValueError:
     #    - the module name was invalid
     #    - the module name is __main__
-    #    - *we* raised `ValueError` due to `spec` being `None`
+    #    - *we* raised `ValueError` due to `root_spec` being `None`
     except (ImportError, ValueError):
         pass  # handled below
     else:
         # namespace package
-        if spec.origin in {"namespace", None}:
-            return os.path.dirname(next(iter(spec.submodule_search_locations)))
+        if root_spec.origin in {"namespace", None}:
+            package_spec = importlib.util.find_spec(import_name)
+            if package_spec is not None and package_spec.submodule_search_locations:
+                # Pick the path in the namespace that contains the submodule.
+                package_path = pathlib.Path(
+                    os.path.commonpath(package_spec.submodule_search_locations)
+                )
+                search_locations = (
+                    location
+                    for location in root_spec.submodule_search_locations
+                    if _path_is_relative_to(package_path, location)
+                )
+            else:
+                # Pick the first path.
+                search_locations = iter(root_spec.submodule_search_locations)
+            return os.path.dirname(next(search_locations))
         # a package (with __init__.py)
-        elif spec.submodule_search_locations:
-            return os.path.dirname(os.path.dirname(spec.origin))
+        elif root_spec.submodule_search_locations:
+            return os.path.dirname(os.path.dirname(root_spec.origin))
         # just a normal module
         else:
-            return os.path.dirname(spec.origin)
+            return os.path.dirname(root_spec.origin)
 
     # we were unable to find the `package_path` using PEP 451 loaders
     loader = pkgutil.get_loader(root_mod_name)
@@ -831,12 +869,11 @@ def find_package(import_name: str):
     for import. If the package is not installed, it's assumed that the
     package was imported from the current working directory.
     """
-    root_mod_name, _, _ = import_name.partition(".")
-    package_path = _find_package_path(root_mod_name)
+    package_path = _find_package_path(import_name)
     py_prefix = os.path.abspath(sys.prefix)
 
     # installed to the system
-    if package_path.startswith(py_prefix):
+    if _path_is_relative_to(pathlib.PurePath(package_path), py_prefix):
         return py_prefix, package_path
 
     site_parent, site_folder = os.path.split(package_path)
diff --git a/src/flask/typing.py b/src/flask/typing.py
index 701392a7..18c2b10e 100644
--- a/src/flask/typing.py
+++ b/src/flask/typing.py
@@ -1,37 +1,30 @@
 import typing as t
 
-
 if t.TYPE_CHECKING:  # pragma: no cover
     from _typeshed.wsgi import WSGIApplication  # noqa: F401
     from werkzeug.datastructures import Headers  # noqa: F401
     from werkzeug.wrappers import Response  # noqa: F401
 
 # The possible types that are directly convertible or are a Response object.
-ResponseValue = t.Union[
-    "Response",
-    str,
-    bytes,
-    t.Dict[str, t.Any],  # any jsonify-able dict
-    t.Iterator[str],
-    t.Iterator[bytes],
-]
-StatusCode = int
+ResponseValue = t.Union["Response", str, bytes, t.Dict[str, t.Any]]
 
 # the possible types for an individual HTTP header
-HeaderName = str
+# This should be a Union, but mypy doesn't pass unless it's a TypeVar.
 HeaderValue = t.Union[str, t.List[str], t.Tuple[str, ...]]
 
 # the possible types for HTTP headers
 HeadersValue = t.Union[
-    "Headers", t.Dict[HeaderName, HeaderValue], t.List[t.Tuple[HeaderName, HeaderValue]]
+    "Headers",
+    t.Mapping[str, HeaderValue],
+    t.Sequence[t.Tuple[str, HeaderValue]],
 ]
 
 # The possible types returned by a route function.
 ResponseReturnValue = t.Union[
     ResponseValue,
     t.Tuple[ResponseValue, HeadersValue],
-    t.Tuple[ResponseValue, StatusCode],
-    t.Tuple[ResponseValue, StatusCode, HeadersValue],
+    t.Tuple[ResponseValue, int],
+    t.Tuple[ResponseValue, int, HeadersValue],
     "WSGIApplication",
 ]
 
@@ -51,6 +44,7 @@ TemplateGlobalCallable = t.Callable[..., t.Any]
 TemplateTestCallable = t.Callable[..., bool]
 URLDefaultCallable = t.Callable[[str, dict], None]
 URLValuePreprocessorCallable = t.Callable[[t.Optional[str], t.Optional[dict]], None]
+
 # This should take Exception, but that either breaks typing the argument
 # with a specific exception, or decorating multiple times with different
 # exceptions (and using a union type on the argument).
@@ -58,3 +52,7 @@ URLValuePreprocessorCallable = t.Callable[[t.Optional[str], t.Optional[dict]], N
 # https://github.com/pallets/flask/issues/4295
 # https://github.com/pallets/flask/issues/4297
 ErrorHandlerCallable = t.Callable[[t.Any], ResponseReturnValue]
+ErrorHandlerDecorator = t.TypeVar("ErrorHandlerDecorator", bound=ErrorHandlerCallable)
+
+ViewCallable = t.Callable[..., ResponseReturnValue]
+RouteDecorator = t.TypeVar("RouteDecorator", bound=ViewCallable)
diff --git a/tests/test_instance_config.py b/tests/test_instance_config.py
index ee573664..c8cf0bf7 100644
--- a/tests/test_instance_config.py
+++ b/tests/test_instance_config.py
@@ -1,4 +1,3 @@
-import os
 import sys
 
 import pytest
@@ -15,19 +14,6 @@ def test_explicit_instance_paths(modules_tmpdir):
     assert app.instance_path == str(modules_tmpdir)
 
 
-@pytest.mark.xfail(reason="weird interaction with tox")
-def test_main_module_paths(modules_tmpdir, purge_module):
-    app = modules_tmpdir.join("main_app.py")
-    app.write('import flask\n\napp = flask.Flask("__main__")')
-    purge_module("main_app")
-
-    from main_app import app
-
-    here = os.path.abspath(os.getcwd())
-    assert app.instance_path == os.path.join(here, "instance")
-
-
-@pytest.mark.xfail(reason="weird interaction with tox")
 def test_uninstalled_module_paths(modules_tmpdir, purge_module):
     app = modules_tmpdir.join("config_module_app.py").write(
         "import os\n"
@@ -42,7 +28,6 @@ def test_uninstalled_module_paths(modules_tmpdir, purge_module):
     assert app.instance_path == str(modules_tmpdir.join("instance"))
 
 
-@pytest.mark.xfail(reason="weird interaction with tox")
 def test_uninstalled_package_paths(modules_tmpdir, purge_module):
     app = modules_tmpdir.mkdir("config_package_app")
     init = app.join("__init__.py")
@@ -59,6 +44,25 @@ def test_uninstalled_package_paths(modules_tmpdir, purge_module):
     assert app.instance_path == str(modules_tmpdir.join("instance"))
 
 
+def test_uninstalled_namespace_paths(tmpdir, monkeypatch, purge_module):
+    def create_namespace(package):
+        project = tmpdir.join(f"project-{package}")
+        monkeypatch.syspath_prepend(str(project))
+        project.join("namespace").join(package).join("__init__.py").write(
+            "import flask\napp = flask.Flask(__name__)\n", ensure=True
+        )
+        return project
+
+    _ = create_namespace("package1")
+    project2 = create_namespace("package2")
+    purge_module("namespace.package2")
+    purge_module("namespace")
+
+    from namespace.package2 import app
+
+    assert app.instance_path == str(project2.join("instance"))
+
+
 def test_installed_module_paths(
     modules_tmpdir, modules_tmpdir_prefix, purge_module, site_packages, limit_loader
 ):
diff --git a/tests/typing/typing_error_handler.py b/tests/typing/typing_error_handler.py
new file mode 100644
index 00000000..ec9c886f
--- /dev/null
+++ b/tests/typing/typing_error_handler.py
@@ -0,0 +1,33 @@
+from __future__ import annotations
+
+from http import HTTPStatus
+
+from werkzeug.exceptions import BadRequest
+from werkzeug.exceptions import NotFound
+
+from flask import Flask
+
+app = Flask(__name__)
+
+
+@app.errorhandler(400)
+@app.errorhandler(HTTPStatus.BAD_REQUEST)
+@app.errorhandler(BadRequest)
+def handle_400(e: BadRequest) -> str:
+    return ""
+
+
+@app.errorhandler(ValueError)
+def handle_custom(e: ValueError) -> str:
+    return ""
+
+
+@app.errorhandler(ValueError)
+def handle_accept_base(e: Exception) -> str:
+    return ""
+
+
+@app.errorhandler(BadRequest)
+@app.errorhandler(404)
+def handle_multiple(e: BadRequest | NotFound) -> str:
+    return ""
diff --git a/tests/typing/typing_route.py b/tests/typing/typing_route.py
new file mode 100644
index 00000000..ba49d132
--- /dev/null
+++ b/tests/typing/typing_route.py
@@ -0,0 +1,62 @@
+from __future__ import annotations
+
+from http import HTTPStatus
+
+from flask import Flask
+from flask import jsonify
+from flask.templating import render_template
+from flask.views import View
+from flask.wrappers import Response
+
+app = Flask(__name__)
+
+
+@app.route("/str")
+def hello_str() -> str:
+    return "<p>Hello, World!</p>"
+
+
+@app.route("/bytes")
+def hello_bytes() -> bytes:
+    return b"<p>Hello, World!</p>"
+
+
+@app.route("/json")
+def hello_json() -> Response:
+    return jsonify({"response": "Hello, World!"})
+
+
+@app.route("/status")
+@app.route("/status/<int:code>")
+def tuple_status(code: int = 200) -> tuple[str, int]:
+    return "hello", code
+
+
+@app.route("/status-enum")
+def tuple_status_enum() -> tuple[str, int]:
+    return "hello", HTTPStatus.OK
+
+
+@app.route("/headers")
+def tuple_headers() -> tuple[str, dict[str, str]]:
+    return "Hello, World!", {"Content-Type": "text/plain"}
+
+
+@app.route("/template")
+@app.route("/template/<name>")
+def return_template(name: str | None = None) -> str:
+    return render_template("index.html", name=name)
+
+
+class RenderTemplateView(View):
+    def __init__(self: RenderTemplateView, template_name: str) -> None:
+        self.template_name = template_name
+
+    def dispatch_request(self: RenderTemplateView) -> str:
+        return render_template(self.template_name)
+
+
+app.add_url_rule(
+    "/about",
+    view_func=RenderTemplateView.as_view("about_page", template_name="about.html"),
+)
diff --git a/tox.ini b/tox.ini
index 077d66f2..ee4d40f6 100644
--- a/tox.ini
+++ b/tox.ini
@@ -9,6 +9,7 @@ envlist =
 skip_missing_interpreters = true
 
 [testenv]
+envtmpdir = {toxworkdir}/tmp/{envname}
 deps =
     -r requirements/tests.txt
     min: -r requirements/tests-pallets-min.txt