A partition $(C_1,C_2,...,C_q)$ of $G = (V,E)$ into clusters of strong (respectively, weak) diameter $d$, such that the supergraph obtained by contracting each $C_i$ is $\ell$-colorable is called a strong (resp., weak) $(d, \ell)$-network-decomposition. Network-decompositions were introduced in a seminal paper by Awerbuch, Goldberg, Luby and Plotkin in 1989. Awerbuch et al. showed that strong $(exp\{O(\sqrt{ \log n \log \log n})\}, exp\{O(\sqrt{ \log n \log \log n})\})$-network-decompositions can be computed in distributed deterministic time $exp\{O(\sqrt{ \log n \log \log n})\}$. The result of Awerbuch et al. was improved by Panconesi and Srinivasan in 1992: in the latter result $d = \ell = exp\{O(\sqrt{\log n})\}$, and the running time is $exp\{O(\sqrt{\log n})\}$ as well. Much more recently Barenboim (2012) devised a distributed randomized constant-time algorithm for computing strong network decompositions with $d = O(1)$. However, the parameter $\ell$ in his result is $O(n^{1/2 + ε})$. In this paper we drastically improve the result of Barenboim and devise a distributed randomized constant-time algorithm for computing strong $(O(1), O(n^ε))$-network-decompositions. As a corollary we derive a constant-time randomized $O(n^ε)$-approximation algorithm for the distributed minimum coloring problem, improving the previously best-known $O(n^{1/2 + ε})$ approximation guarantee. We also derive other improved distributed algorithms for a variety of problems. Most notably, for the extremely well-studied distributed minimum dominating set problem currently there is no known deterministic polylogarithmic-time algorithm. We devise a {deterministic} polylogarithmic-time approximation algorithm for this problem, addressing an open problem of Lenzen and Wattenhofer (2010).