Memberships

Why does the paypal recognize 1-Year memberships and allows you to do through the payment process, but when you add say a 3-Month membership. The 1-Year stops working? Also if a membership is set up for say 1-Month $10. How does dolphin know that their membership will expire? How is that set? I know there are settings for the individual allowed actions, but if you set those to dates. If someone pays for another month. How do those dates get changed? I guess my question is what controls the cut off dates of use?