Let's start with people and addresses. A fairly easy mapping. One person can have one or more addresses, or one to many. The basics of that are drawn out below:
The primary key (whether natural or surrogate, defined here as a surrogate) for PEOPLE is stored as a Foreign Key in the ADDRESSES table. To guarantee that a PEOPLE key is supplied for each address, you should add a NOT NULL constraint along with the FK constraint.
Not too difficult.
What if down the road you need to add organizations? Do you shove them into the people table or do you create a new table for them? My initial thought is to create a new table called ORGANIZATIONS.
Easy enough right?
Now I want to track addresses for the ORGANIZATION table. Hmmm...how to do that? My first thought was to just create another address table.
Hmmm...now I have addresses in two different tables. I've introduced the chance of having non-standardized addresses (two entry points, or maybe I don't have the same attributes in both tables). Writing a query to get all the addresses (for a mailing perhaps) will be a bit more difficult.
How about just adding another column to the original ADDRESS table?
That works...sort of. I must remove the NOT NULL constraint for PEOPLE and I definitely can't add one for ORGANIZATION. But they're in one table and I can have one entry point (it would have to be conditional though). What if in the future I add another table? Do I just add another column (FKd) to ADDRESS.
It starts to become a bit unwieldy.
So, enter the ENTITY.
The ENTITY just becomes a placeholder, providing keys for PEOPLE (one to one) and ORGANIZATIONS (one to one). ENTITYID is stored in the ADDRESS table and voila! Perhaps this is called a supertype (not real sure on my terminology here). You now have one entry to the ADDRESS table (well...hopefully). To pull all addresses is easy.
You can use the surrogate key from ENTITY as your primary key in PEOPLE and ORGANIZATIONS, so if you want to bypass the ENTITY table, you can do so easily.
That's my solution anyway. How about you? Same, different? Am I crazy (I'm starting to think so...)?