Human-readable names for wallets exist because addresses are long strings that nobody can check by eye. The name is not the account; it is a pointer to one, and the distinction matters when things go wrong.
The registry is a contract, not a directory
A naming service stores ownership of each name in a contract, recording which address controls it and where it currently points.
Resolution happens by querying that contract, so a wallet sending to a name is really reading a record and then sending to whatever address it returns.
Because the record lives on chain, no company operates a database that must be trusted, though the contract's own upgrade permissions are worth checking.
Names solve a copying problem
Address entry is the most error-prone step in using crypto, and mistakes are unrecoverable because there is no reversal mechanism.
A short name can be read, spoken and confirmed by a person, which removes the class of errors that arise from copying strings nobody verifies.
It also defeats substitution attacks that rely on lookalike addresses, since a name either matches or does not and has no truncated display to exploit.
The pointer can change
Ownership and resolution are separate. The controller of a name can update where it points at any time.
That flexibility is useful for someone rotating wallets, and it means a name saved months ago may now resolve somewhere different.
For recurring payments to a name, the trust placed in the recipient extends to whoever controls the record, which is usually but not always the same party.
Registration is a lease
Most services charge for a period rather than selling permanently, so names expire and can be re-registered by someone else after a grace period.
An expired name that lapses to a new owner will resolve to their address, and anyone still sending to it will send to a stranger.
Charging for time also discourages bulk registration of every plausible name, since holding an inventory carries an ongoing cost.
Support is uneven across applications
Resolution has to be implemented by each wallet and interface, and coverage varies by service and by chain.
Where a name is not supported, users fall back to the raw address, which is why names supplement address handling rather than replacing it.
Reverse resolution, where an address displays as a name, requires a separate record and is what allows interfaces to show a readable identity instead of a string of characters.