The best way to understand events is to see an event as the mechanism that connects Navision and Business Notification. An event is tied to a business entity, and every notification is based on one event from one business entity. An event is raised in the Navision business logic (the C/AL code), as decided by a Navision developer, when "something" happens.
For example:
You want notifications when a customer is being blocked.
The developer creates a business entity (say, "Customer").
The developer adds an event (say, "Customer Blocked") to this business entity.
The developer tests if the blocked status of a customer in Navision has changed from not blocked to one of the blocked states (either "Ship," "Invoice" or "All") whenever the customer table is updated.
If the Blocked status has changed, the "Customer Blocked" event of the "Customer" business entity is raised.
This causes a document to be sent to Business Notification. This document contains the name of the event, as well as the data for the customer that is included in the "Customer" business entity.
Business Notification will now process the information in the document. Depending on the filters set up in Business Notification, one or more e-mail messages may be sent.