Strictly speaking /etc should be relatively static, and dynamic data should go into /var, so you (or the package installation) would create /var/lib/foobar with proper ownership.

> Strictly speaking /etc should be relatively static

I really wish that was true but nasty stuff like wpa_supplicant/, resolv.conf (now usually a systemd-resolved managed symlink), NetworkManager/ and X11/ lives there, very mutable and often constantly changing under the hood.

I have not seen any applications creating a user with the applications name. How can one avoid a naming conflict? Kate (a text editor) might be installed on a system by Kate (a person). What I have noticed however is that there are daemons running as root and is used as a "middle man" whenever an application running as a normal user needs some extra privilege.

Desktop applications no, because they must run as the user (let's leave containers and sandboxes alone.) Servers yes, for example PostgreSQL creates the postgres user and runs as such.