You should read documentation on Time Evaluation to learn, such as those mentioned by Woody, those in the Time Eval. Wiki (HCM Time Management - ERP Human Capital Management - SCN Wiki) and those available though help.sap.com
Also do a Time Evaluation Test, with the "Display log" box checked, for one employee and for a period of a few days, and drill down into that log to see how Time Entries are read and processed.