Very simple.
Let’s say there is a kingdom, that is divided into five regions by the king.
This king gives these five regions to 5 representatives of the king, let’s say they are called dukes.
Then these dukes divide these territory in 5 sub-regions, that they give to 5 representatives of these dukes, let’s call them barons.
Let’s say that there sub-regions have one castle each, and each castle has three cities around it.
Each baron appoints a mayor to those cities, and each mayor takes taxes from the people that live there, taxes that are given to the barons after the major took a part for himself.
Then the barons, while keeping a part for themselves, give a portion to the dukes.
Then the dukes, while keeping a part for themselves, give a portion to the king, and thus everyone is happy besides the people that have to pay taxes.
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