"Is it correct that Parcel Select Lightweight sack tags have STD in the Contents Lines, instead of PSLW or MKT using MailStream Plus"

MailStream Plus™, all versions, all platforms
The sack tags are not wrong in saying STD instead of PSLW (for 'Parcel Select Lightweight").  But it requires an explanation.  There are two places in the DMM that say what the line should say, and they differ for PSLW pieces. 

The first place is DMM section 255 6.0, the section "Preparing Parcel Select Lightweight"

6.2 is for "Preparing Machinable Parcels" and you will see it says that the sack lines should have PSLW, such as e where it says-
"Line 2: “PSLW MACH WKG.”"

6.3 is for "Preparing Irregular Parcels" and you will see it says that the sack lines should have PSLW, such as f where it says-
"Line 2: “PSLW IRREG WKG.”"

The second place with the info is the "CIN" chart (Content Identifier Numbers").  It gives the 3-digit CIN number and the Content Line text.  (It's really the more 'official' table of what is to be used for the tag lines.) 

In the CIN table back in 2014 when this KB was first written, if you went down to the
"PACKAGE SERVICES" section and then to the 
"Parcel Select Lightweight Machinable Parcels" sub-section, you see lines such as-
mixed NDC sacks  674   STD MACH WKG

And then in the "Parcel Select Lightweight Irregular Parcels" sub-section you see lines such as-
mixed NDC sacks  594   STD IRREG WKG

They have "STD".  You may also notice that *none* of the Contents Lines in the CIN table have 'PSLW' on them.

FYI- Normally the preparation instructions labelling agrees with the CIN table.   

When this question was first raised in 2014, Pitney Bowes Software went to the USPS to ask them why there's conflicting information between the two sections. The USPS answered that either line can be used.  
Since MailStream Plus
™ is built around using the CIN table, it was decided to continue using it for the Contents Lines.  That's why MailStream Plus puts 'STD' in them.

May 2019 update:
The CIN table is now located in DMM 204 3.2.4.  Now if you look at the section for
"Parcel Select Lightweight Machinable Parcels"
"Parcel Select Lightweight Irregular Parcels"
you see lines like-
mixed NDC sacks               674         MKT MACH WKG
mixed NDC sacks               594         MKT IRREG WKG

A couple years ago, the USPS re-named 'Standard Mail' to 'USPS Marketing Mail.  So the USPS changed the CIN table from using 'STD to have 'MKT'.  To avoid confusion though, MailStream Plus along with most of the Mailing Industry continues to use 'STD'. 
The USPS still allows STD to be used.  If at some time in the future the USPS *requires* MKT, MailStream Plus will be changed.
UPDATED:  May 17, 2019