Our continuous delivery set-up, until recently, was delivering Service Fabric packages using the following command:
msbuild SFApp.sfproj /t:Package
MSBuild only supports a small set of target names that can be specified at the solution level. As you've discovered, Package is not one of them. You'll need to execute two separate calls to MSBuild: one which builds the solution and one which calls the Package target on the sfproj. The Package target of an sfproj has a dependency on the Build target so it will ensure that the sfproj and its project dependencies are built.