Mike says that one interpretation is that, "nibbana involves the end of
the world (of formations)."
I think that I would agree with this, although the phrase "world of
formations", is not found in the Sutta Pitaka. [ correct me if I am wrong.]
However, in SN 12.49 "the world" is substituted for suffering in Dependent
Origination, (all twelve links).
I will quote the ending of this sutta. Bhikkhu Bodhi, Connected
Discourses, page 585 - 6:
"Bhikkhus, when a noble disciple thus understands as they really are
the origin and the passing away of the world, he is then called a
noble disciple who is accomplished in view, accomplished in vision,
who has arrived at this true Dhamma, who sees this true Dhamma, who
possesses a trainee's knowledge, a trainee's true knowledge, who has
entered the stream of the Dhamma, a noble one with penetrative wisdom,
one who stands squarely before the door to the Deathless."
My interpretation: All twelve links are the "world", when a noble
disciple understands how this "world" originates and passes away,
he has attained right view and has entered the stream. At this stage
it is just the understanding of how this can happen, the "world" has
not yet ceased.
On the question of formations, I think every link should be understood
as a formation (although this is not strictly correct).
Formations are mostly "old volition" or past volition which has become
an unconscious habit.