The way it works is that, let's say you are modelling a pump. The pump is made up of a motor, a shell, the fluid with its own conservation equations etc. In such cases, inheritance and aggregation are godsends that allow us to quickly compose real-life objects as aggregates of easily modified and understood sub-components. Also, once you've taken these sub components to a point where you trust them, there is no further need to spend any time thinking about them. They are there, and you trust them, and you can reuse them and combine them with confidence.
More than anything, it gives us a great way to think about the modelling problem. The success of Modelica speaks to the superiority of this paradigm over things that came before it.