I wrote a long description here, but realised that the best explanation is: https://www.youtube.com/watch?v=kzACn3l49HM
Anyway, I won’t delete it:
When you use tone equalizer in any of the preserve details modes, it’ll blur the image to create a mask; you then use the various controls under mask post-processing to get it (the brightness of the mask) to fit into that 8 EV range. The use of the mask guarantees that pixels in an area (unless separated by an edge) are treated the same way: the same adjustment, defined by the brightness of the mask covering them and the adjustment you set for that mask brightness level, will be applied, thus local contrast (the relative brightness of pixels) is maintained.
Suppose you want to compress the dynamic range (reduce global contrast) a bit. This could be done with an inverse S curve: you’d lower highlights and raise shadows. If you apply that curve without detail preservation (that is, on a pixel-by-pixel basis), a bright and a dark pixel next to each-other will end up with less of a difference → local contrast is lost. With preserve details, if the area containing those pixels is dark, both pixels will be brightened; if it’s bright, both will be darkened. That way, global contrast is reduced (brighter areas become less bright, darker areas become less dark), but local contrast (the bright pixel’s brightness compared to its dark neighbour) is maintaned.