"Consider using a mapped object type instead." - what's a mapped object type and how do I use it here?

When I try to compile this Typescript code

interface Foo { 
    [foo: "hello" | "world"]: string;
}

I get this error message

An index signature parameter type cannot be a union type. Consider using a mapped object type instead.

What is a mapped object type, and how do I use it?

A mapped object type operates on a set of singleton types and produces a new object type where each of those singletons is turned into a property name.

For example, this:

type Foo = {
    [K in "hello" | "world"]: string
};

would be equivalent to

type Foo = {
    "hello": string;
    "world": string;
};

Keep in mind that a mapped object type is a distinct type operator - that syntax in the braces can't be used in interfaces, or object types with other members. For example

interface Foo {
    [K in "hello" | "world"]: string; // ❌
}

produces the following error:

A computed property name in an interface must refer to an expression whose type is a literal type or a 'unique symbol' type.

Mapped object types are useful for a lot of different things. Read more here: http://www.typescriptlang.org/docs/handbook/advanced-types.html#mapped-types

This is invalid:

    type DirectiveType = 'package-as' | 'externals' | 'move-folders' | 'ignore';
    type Directives = { [key:DirectiveType]?: RootDirectives };
    
    export class PkgmetaFile {
        private _directives: Directives = {};
    }

But this is valid:

    type DirectiveType = 'package-as' | 'externals' | 'move-folders' | 'ignore';
    type Directives = { [Key in DirectiveType as string]?: RootDirectives };
    
    export class PkgmetaFile {
        private _directives: Directives = {};
    }