Hi lal, formation refers to any mental formation. It refers to vitakka, vicara, lobha, dosa, metta, vedana, tanha, whatever that arises conditionally in the mind.
I belief the sutta’s teach to see all those formations as they are; ‘this is not mine, not who i am, not myself’. This apllication of insight does not discriminate in the wholesome and unwholesome.
Siebe