I stumbled on this piece from Clay Shirky on situated software. Interesting notion: as you decrease the size of the user target base your (social) software can leverage the non-tech links that exist in these micro communities and create services that are not possible if you consider a traditional large scope Web Application (target at a large amount of users).
Applying this to the Long Tail of Software, this situated software exists at the very end of the long tail. Software that is further down the tail than that I can only see the software that you build for one person. Which in a way is an extreme case of situated software.