First scenario:
You edit entry OBJECT_1, make a mod out of the edit, called Preparation A.
You further edit the entry and make another mod out of the newer edit, called Preparation B.
Preparation B contains all of the desired data from Preparation A, making Preparation A obsolete and you would only use Preparation B, no need for combining.

Second scenario:
You edit entry OBJECT_2A, make a mod out of it, called Preparation C.
You edit a different entry, OBJECT_2B, make a different mod out of it, called Preparation D.
If you wanted a mod that contained both of these edited entries, you could simply combine them with no problem. Preparation C + Preparation D = Preparation E. Preparation E gets distributed and Preparations C and D get tossed.

Third scenario:
You edit entry OBJECT_3, make a mod out of it, called Preparation F.
You reinstall or restore from backups or for whatever reason and by any means replace the edits with the original data.
You go back to the same entry, OBJECT_3, make different edits, make a mod out of that, called Preparation G.
If you wanted the effects of both mods, you couldn't combine them because they edit the same entry, conflicting. The one applied first will be overwritten by the one applied after, and here's my theory: When combining, Preparation F + Preparation G = Preparation G, even if it's called Preparation H.

That was a bit out of my way to make a small PrepH reference.