I'm not "confused" by it. I get the "logic". I just don't agree with it, and think it's a wrong UI design decision.
Windows handles it a little differently, and more logically IMHO. With Apps that run in multiple windows (Excel being an example), if you have multiple windows open, clicking the Red X closes the window, but does not quit the parent application (as you incorrectly wrote). However, if the window is the last (or only) window running, clicking the X does close the app.
I can't tell you how many long-time Mac users I've encountered who have their dock loaded up with phantom apps, running but with no window or document open.
Yes, you're right I didn't describe it correctly.
But here's the problem on the other side. Let's say I'm using Windows and Excel. I'm working on 5 spreadsheets and one-by-one I finish and close what I'm doing. Now I want to start a 6th. I have to have the forethought to create that 6th document prior to closing the 5th. So then you have to go back and relaunch Excel. It's the flip side of the problem you just described.