What looks confusing has a lot of science and math backing it up. The procedure is known as yield management (
http://en.wikipedia.org/wiki/Yield_management#Airlines) and the idea behind it is selling as many seats on a plane as expensively as possible. Since nothing is going stale quicker then unsold airline seat when the doors close they rather sell you a seat for 200$ instead of asking 2K and having an unsold seat.
In a nutshell: An airplane cabin is segmented into a number of classes. There can be a dozen, or even more classes, even though you only see economy, business and maybe first.
Each class gets allocated a number of seats and the actual booking class can have more, or less restrictions attached to it (for example: refunding, or changing the ticket, mandatory Saturday night stay, minimum duration of stay, etc).
The more flexibility you require the more expensive the ticket becomes.
Even though it looks very confusing from a passenger perspective and prices can fluctuate on an hourly basis, depending on the number of seats available for a specific sub class, the concept makes a lot of sense from an airline's perspective.