An entity in CityGen3D refers to a type of object that is represented by a single position on the map. In OpenStreetMap individual locations like this are referred to as nodes and are tagged for identification.
Each entity type can be assigned it's own icon for visualisation on the 2D map.
The Entity interface therefore allows you to associate different nodes with appropriate prefabs so they can be instantiated in their correct position automatically when building the 3D scene.
This makes it really easy to have objects appear in realistic locations, whether they be post boxes, litter bins, park benches, or any other prop that can be defined by a single position.
CityGen3D can also validate incoming data through location settings on a per entity basis. For instance a setting of "Default or Roadside" will attempt to use the mapped coordinates for an object. But if it's stated position overlaps a highway, it will instead be placed on the sidewalk.