I'm getting into it myself so all this is theoretical to me. Here's the thing the way I understand it, the BCDE is basically the 4 bits you're trying to control. In the binary world, the 4 bits from 0000 to 1111 there's a total combinations of 16 possibilities. So by switching the digital lines on and off, like 0001 is 1 and 0010 is 2, is how you would achieve your 16 channels you can open one at a time. You also need an analog line to read the input. So the D0 to D3 controls which 'Gate' to open, and the A0 will be the one that takes the reading.
Now you can throw another 2 to 1 MUX in the equation, but you need to drive it with another digital line. You can do away with that. So what you do is drive both 16 MUX with the same 4 digital lines (D0 to D3). So you basically send the instruction to tell both MUX to let's say open Gate 1 (my term). Now the digital lines only control what Gate to open. In order to read the signal, you read through the analog lines. So if you hook one MUX to A0 and the other MUX to A1, then you just pick which MUX you want to read based on which analog input you choose.