Drupal stores data in a normalized format. Database normalization, in short, involves the organization of data in specifically related tables. Each entity type has its own database table, and all fields have their own database table. When you create a view and specify what kind of data will be shown, you are specifying a base table in the database that Views will query. Views will automatically associate fields that belong to the entity and it's relationship to those tables for you.

When an entity has an entity reference field, you can add a relationship to the referenced entity type's table. This is an explicit definition, whereas fields are implicit. When the relationship is explicitly defined, all the referenced entity type's fields come into scope. The fields on the referenced entity type can then be displayed, filtered, and sorted.