Think of each place record as a spot on the Earth. As you traverse up in the hierarchy that spot becomes larger, and a larger spot may encompass many smaller spots.
Using the Alternative names tab, you can account for any changes of the name of that spot on the Earth.
The Enclosed by tab holds the records of the next larger record for the various time frames. Each record within the hierarchy can have their own name changes as well as their own enclosed by records.
With various changes in names and various paths through the hierarchy the same base place record will display the proper name for the date of the event.
I hope this helps.