Planet uses IPFS as the solution for distributing content. In IPFS, each piece of content has its own unique CID. So if you add a whole directory for publishing to IPFS, each unique file in the directory will have its own unique CID, and the top-level directory has its own CID too.
When publishing, you are linking the top-level CID to your IPNS so that when others try to access the IPNS, they will get that CID. In Planet's case, it is the CID of a directory that contains the website you built with Planet.