It really is one "new" word consisting of a bunch of words spelled without spaces. It is a compound, where every word adds additinal information to the last component. An easier example is sth like "Altbauwohnung" which would be an apartment (Wohnung) in an old (alt) building (Bau) where "Altbau" is also a compound. This way of compunding enables you to build new words everyone can understand the first time they encounter them, but also to build those stupidly long words.
What if I said in English, you can "compound" words with adjectives so for example if you have a book, you can add red and say redbook, and you can keep going and do stuff like uselessoldreddirtyneverusedbook. You can even add possessives which have their own adjectives, like if the book was owned by a redbearded german army vet you'd say
The redbeardedgermanarmyvet'suselessoldreddirtyneverusedbook