Easy!
You have 4 tracks to record onto. But you don't have to record all 4 tracks at once.
Let's say you have a four piece garage band with drums, bass, guitar, and keyboard player.
You could record all four onto one track, but what's the point of a 4 track recorder? You can turn the volume of the bass up, the guitar down, eq the keyboard seperatly, if you give each instrument a different track! Cool!
So why do they give you more inputs than tracks?
So that you can record the drum track with six microphones on the kit.
So that you can record the bass player on track 3 (even though he's plugged into channel two) and simultaneously record 5 vocalists to track 4.
That's what multi-tracking is all about.