Component composition works great in Polymer - it's just the Shadow DOM spec: child elements are distributed into the Shadow DOM via <content> tags. The result is what's called the composed tree.
Because standards, you can compose Polymer elements with native elements or custom elements built with or without a helper library like Polymer.
Not so much confusing as my own ignorance. My last pass through Polymer was two years (I think) ago and there's been a number of changes to the components specs that I've been ignoring. At the time I saw a lot of excellent examples/docs related to encapsulation and none related to content insertion. I'll take another look later this year.
Because standards, you can compose Polymer elements with native elements or custom elements built with or without a helper library like Polymer.
What part is confusing?