I am looking for a day pack that is fully packable. Any favorites?

What do you mean by "fully packable"?

A day pack that can be compressed and stored in another pack.

Rick Steves sells one: travelstore.ricksteves.com

LeSportsSac has very lightweight nylon ones in that style.

Backpacks come in many flavors, from the lightweight one that's on Rick Steves website (which I think of as more of an emergency backpack) to a serious day pack which can carry 50+ lbs, has excellent padding on the straps, and can be fully customized to fit your body to be comfortable for all day hiking. Those usually have some kind of internal frame and really don't "pack." What did you want this packable daypack to do for you?

"a serious day pack which can carry 50+ lbs, has excellent padding on the straps, and can be fully customized to fit your body to be comfortable for all day hiking." - in travel terms that's not a day pack, it's a backpack! No-one in their right mind carts 50 lbs around when they're out for a day's sightseeing.

I was just trying to find out how the OP really expects to use this item for which she has requested advice. I thought she was rather non-specific, which is a shame because she potentially has a very knowledgeable base from which to seek assistance.

well I am assuming they simply want a bag to use for touring around in the day time, is "backpack" styled (i.e., two straps and worn on your back!).

That is correct.

I thought of this thread yesterday. I saw a group of 4 tourists in downtown Seattle. Each person was wearing a small backpack, and they appeared to be very lightweight, like made of ripstop nylon without a lot of structure to them. Sorry no idea the brand since I was driving by in my car!

REI sells one like on the Rick Steves site - rip stop, unstructured, folds into a tiny pouch (size of a fist, but flatter) that actually has a carabiner/key ring on it so you can hang it if you want. About $20.

And I saw the same gadget - different brand - at the central terminal at SeaTac in the Ex Officio store, again ~ $20.

Eddie Bauer sells those "packable" bags as well. They have totes, backpacks, and various sized duffels.