Hi,
in the "junction" heat becomes generated.
1) now you did the first step correctly to calculate the power dissipation.
2) Then do the next step - calculate without any additional cooling effort - just to dissipate the heat directly to the ambient.
***
If you now see that the junction temperature is too high, then you need additional effort to spread the heat.
This could be via the PCB, via heatsink, via increased air flow (fan) ...
So:
junction -> package --> heat spreader --> ambient
or more detailed:
Junction --> package, legs --> PCB, copper --> ambient
Junction --> package --> heatsink --> ambient
Klaus