What is the meaning of “Failed building wheel for X” in pip install?

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This is a truly popular question here at SO, but none of the many answers I have looked at, clearly explain what this error really mean, and why it occurs.

One source of confusion, is that when (for example) you do pip install pycparser, you first get the error:

Failed building wheel for pycparser

which is then followed by the message that the package was:

Successfully installed pycparser-2.19.

# pip3 install pycparser

Collecting pycparser
  Using cached https://files.pythonhosted.org/packages/68/9e/49196946aee219aead1290e00d1e7fdeab8567783e83e1b9ab5585e6206a/pycparser-2.19.tar.gz
Building wheels for collected packages: pycparser
  Running setup.py bdist_wheel for pycparser ... error
  Complete output from command /usr/bin/python3 -u -c "import setuptools, tokenize;__file__='/tmp/pip-install-g_v28hpp/pycparser/setup.py';f=getattr(tokenize, 'open', open)(__file__);code=f.read().replace('\r\n', '\n');f.close();exec(compile(code, __file__, 'exec'))" bdist_wheel -d /tmp/pip-wheel-__w_f6p0 --python-tag cp36:
  Traceback (most recent call last):
    File "<string>", line 1, in <module>
    ...
    File "/usr/lib/python3.6/site-packages/pkg_resources/__init__.py", line 2349, in resolve
      module = __import__(self.module_name, fromlist=['__name__'], level=0)
  ModuleNotFoundError: No module named 'wheel.bdist_wheel'

  ----------------------------------------
  Failed building wheel for pycparser
  Running setup.py clean for pycparser
Failed to build pycparser
Installing collected packages: pycparser
  Running setup.py install for pycparser ... done
Successfully installed pycparser-2.19

What is going on here?

(I would like to understand how something can fail but still get installed and whether you can trust this package functioning correctly?)

So far the best partial explanation I have found is this.

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