Basically, you select an element and then give each element further elements. In the end, they're all combined to create a spell.

In this specific spell, the first element is set to missile. This means that whatever the spell is, it will shoot out from the player.
The missile element has a fire element which means it will deal fire damage and do stuff that fire does.
The fire element has its own element: explosive, which means it will deal damage in a blast radius around the hit target.
If the spell were explosive -> fire, it'd explode with the caster as the origin point, for example.
If it were just fire, the caster would catch on fire.
missile -> fire would just be a fireball without AoE