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When objects in the display list dispatch events, the events take on a more sophisticated behavior that you can take advantage of. Instead of being fired directly from the dispatcher object, the event appears to come from every DisplayObject walking down from the Stage to the actual target that called dispatchEvent(). Then it's dispatched by the dispatcher itself, and finally it walks back the other way, appearing to come from the dispatcher's parent, then it's parent's parent, all the way back to the Stage again. This is called the event flow, and as strange as it may sound, it's a W3C recommendation for dealing with events.
NOTE
To clarify the phrase "objects in the display list," the event flow applies to DisplayObjects and their subclasses that are currently in a display list. That is, they have been added to another display object in the display list, or put another way, they can be found by walking down the display list from the stage. DisplayObjects that have been created but not added to the stage are not subject to the event flow.